Short-term rentals in Folly Beach, explained properly.

A City business license is required for each dwelling unit (or part of one) advertised or offered as a short-term rental, and it must be renewed every year. Licenses are issued only to owners, not to tenants or lessees, and not until a final certificate of occupancy has been issued. A designated local agent may apply for the owner. Short-term rentals are classified under business license class 9.5 (NAICS 721199).

Besides the business license, each short-term rental unit needs a rental registration permit, renewed every year. Renewals must be completed before June 1 (with a ten-business-day grace period, after which the license is revoked). A new permit application must be filed within 30 days of a new license being issued, with no grace period. The application covers the parcel and tax classification, bedrooms, a site plan with parking and any septic system, maximum occupancy, owner and agent contacts, safety certifications, proof of taxes paid and nights rented in the prior year. Since Ordinance 028-26 (September 15, 2026) there is no separate fee for the registration permit.

Chapter 117 caps investment short-term rental (ISTR) licenses, for homes that are not the owner's legal residence, at 800. No new ISTR license is issued unless the total is below the cap, except for heirs of the February 7, 2023 owner of record. Licenses in good standing can be renewed even if the total is above the cap. The City keeps a waitlist; its waitlist page says only one license is issued per owner. The City's short-term rental page says no new investment licenses are projected to be available for the next business license year. There is no cap on owner-occupied, medical hardship or provisional licenses. The cap was first approved by referendum on February 7, 2023; see the court ruling below.

Ordinance 27-26 bars approval of new business licenses for the rental of any residential dwelling until it expires on February 19, 2027 (unless repealed or extended earlier). Exceptions include renewals for properties legally licensed as of August 19, 2026; new licenses from inheritance or medical hardship under Chapter 117; provisional licenses under the SC Vacation Rental Act; new licenses for waitlisted owners if investment licenses fall below 800; new licenses to rent a legal residence for up to 72 days a year; approvable applications submitted before August 26, 2026; and certain licenses ordered by the City's hearing officer. Applications under an exception must be timely and sufficient for staff approval.

An owner-occupied short-term rental license is for a dwelling that is the owner's legal residence, meaning Charleston County has assigned it the 4% property tax ratio, when the application is filed. An OSTR unit may be rented no more than 72 nights a year (an owner with the military service exemption may rent longer); renting more is a violation. OSTR licenses are not capped and are among the exceptions to the moratorium.

Short-term rental licenses end when the property is transferred and cannot be transferred to a new owner; investment licenses also end if the property loses its 6% tax assessment and owner-occupied licenses end if it loses the 4% assessment. To stay in good standing, an investment license must be used for at least 28 nights a year (with exceptions for disasters and critical repairs), and a renewal must be filed no later than ten business days after the license year ends. A buyer of a licensed rental can get a provisional license for up to 90 days to honour existing bookings under the SC Vacation Rental Act.

Short-term rentals are business license class 9.5: a minimum of $245 on the first $2,000 of gross income plus $2.75 for each additional $1,000. Business license renewals for the 2026 license year ran from March 10 to April 30, 2026 and are filed with the City on a Charleston County business license form.

Short-term rentals may have a maximum overnight occupancy of two persons per bedroom plus two persons per rental dwelling. The Building Official may allow more if the owner shows septic capacity compliance with SCDES rules. Advertising more occupants or bedrooms than permitted is a violation.

Offering a short-term rental in any zoning district for fewer than two consecutive nights is a violation of Chapter 117. Individual rooms in a unit may not be rented at the same time under separate contracts.

One on-site parking space is required for each bedroom rented, except for units in multi-family developments, units approved for resident-only parking signs, and renewals of units licensed and registered before September 13, 2022 (until ownership changes). Septic tanks and drain fields must be protected from parking.

Each owner must name a designated local agent, who may be the owner. A non-owner agent must be a South Carolina licensed attorney, real estate agent, broker in charge or property manager (or work under one). The agent or owner must physically respond to the property within 60 minutes when the City calls about an emergency or needs entry.

Ads must list the business license number and rental registration permit number. The business license number, registration permit number, allowable occupancy and the City's summary of rental rules must be posted prominently inside the unit.

Advertising a short-term rental as an "event house" for events or parties is a violation. Events at a property with a licensed short-term rental may not exceed 25 people and may not include outdoor amplified music, among other conditions.

A violation of Chapter 117 is a civil offense with a fine of up to $500 on conviction, and each day is a separate offense.

A license receives a strike when the owner, agent, occupant or guest is convicted of a violation of Chapter 117 or another City ordinance related to the rental's use (no more than one strike per rental contract). Three strikes in a rolling 12-month period can lead to revocation, suspension or non-renewal of the license.

Charleston County charges a 2% accommodations fee on stays under 30 days throughout the county, including inside its cities and towns, and collects it through its Revenue Collections department. New short-term rentals open an account with the County's local accommodations tax application.

The City levies a 2% municipal accommodations fee on rentals of accommodations in the city (§ 113.03). Charleston County collects it for the City, and returns are due by the 20th of the month after collection. The City Code also states that a 1% beach preservation fee is added to the accommodations tax (§ 151.39).

South Carolina charges a 7% tax on rent for rooms, lodgings or sleeping accommodations furnished to transients, including rentals of a residence (S.C. Code § 12-36-920(A)). The South Carolina Department of Revenue (SCDOR) describes this as 5% sales tax plus 2% accommodations tax, together with any local sales and use taxes that SCDOR collects for counties. SCDOR's ST-575 chart lists the total accommodations rate for each county and city.

SCDOR applies accommodations tax to sleeping accommodations of any kind rented to guests for less than 90 consecutive days, including rooms or spaces in your own home and condos. Rentals to the same person for 90 continuous days are not taxed. A home with six or fewer bedrooms is exempt only when the owner or operator lives on the same premises at the time and does not use a rental agency or online travel company to rent the rooms.

SCDOR says owners who book short-term rentals directly must hold a Retail License to file and pay accommodations tax, with one license for each rental location. If you rent only through a property management or online travel company that takes the reservation and the payment, that company remits the tax for the full booking and you do not need a Retail License. A license is also not required if you rent a room or space for no more than one week each calendar quarter, but the tax must still be filed and paid once a year.

Accommodations tax returns and payments must be filed electronically (SCDOR's MyDORWAY or approved software), by the 20th of the month following the end of the filing period.

Under the Local Accommodations Tax Act, a city or county may add a local accommodations tax of up to 3% on stays taxed under S.C. Code § 12-36-920(A). A county may not charge more than 1.5% inside a city or town without that municipality's consent. SCDOR notes that many local accommodations taxes are not administered by SCDOR, so owners must contact the city or county where the rental is located to report them.