Sharing economy presents challenges to cities

With summer peeking around the corner, it’s time for people to start making vacation plans. Today, we’re seeing more and more people opt to stay in private homes they find through “sharing economy” websites. Also known as “collaborative consumption,” these sites let consumers share access to products or services, rather than having individual ownership.

Some of today’s most well-known collaborative consumption options for short-term rentals include Airbnb and HomeAway. Uber, Rideshare and Lyft are popular for transportation. Then there are also the emerging markets like on-demand scooters and food trucks.

This sharing economy trend is raising many questions for local governments on issues from taxation to land use to public safety. Home sharing has the potential to alter the character of established neighborhoods, and many communities are carefully considering the best way to accommodate the demand for these new types of lodging, while still protecting the safety of housing, neighborhood character and land planning goals.

Understanding South Carolina’s regulations and tax treatments for short-term residential rentals is an important step before developing sharing-economy rental policies.

South Carolina has five general types of short-term rentals for tax purposes. Get details about each type in this Uptown article.

·       Hotels and motels

·       Rentals of second homes and investment properties

·       Rentals of primary residential homes between 15 and 72 days per year

·       Rentals of primary residential homes for up to 14 days a year

·       Rentals of six bedrooms or less in a residential home occupied by the home owner

Regardless of the type of short-term rental, travel companies such as Airbnb and Expedia, through which the rental is booked and paid, owe taxes, including business license, state accommodations, sales and local accommodations.

Currently, the S.C. Department of Revenue collects state sales and accommodations taxes from Airbnb. Although travel companies owe these taxes, they are not consistently paying business license taxes or local accommodations taxes to local governments.