Smithfield, North Carolina Short Term Rental Regulations Guide for Airbnb hosts

Executive Summary: Are Short-Term Rentals Allowed in Smithfield, NC?

YES, short-term rentals are permitted in Smithfield, North Carolina. The current regulatory environment for STRs in Smithfield is characterized as LOW REGULATION according to AirROI's 2025 analysis of the Smithfield Airbnb market. Smithfield currently operates under a relatively permissive framework with fewer restrictions compared to many other North Carolina cities.

Smithfield does not appear to have implemented city-specific short-term rental ordinances at this time, meaning operators primarily operate under North Carolina state regulations. This low-regulation environment presents a favorable opportunity for STR investors, though operators must still comply with applicable state laws, zoning requirements, tax obligations, and any future local ordinance changes.

How to Start a Short-Term Rental Business in Smithfield, NC

Step 1: Property Selection and Zoning Compliance

Identify suitable properties in Smithfield's zoning districts that permit residential use. The Smithfield Unified Development Ordinance (UDO) governs land use and development standards. Key considerations include:

Property Type: Single-family homes are predominant in Smithfield's STR market (88% of listings)
Location: Downtown Smithfield, Smithfield Historic District, and suburban areas like Shady Grove show strong STR performance
Zoning Compliance: Ensure the property is in a zoning district that allows residential use and short-term rentals

Step 2: State-Level Registration and Tax Setup

Register with North Carolina Department of Revenue (NCDOR) if you don't exclusively use marketplaces like Airbnb or VRBO:

Obtain a Sales and Use Tax Certificate of Registration for state sales tax
Register for local sales and lodging taxes through Johnston County tax authority
Important: If you transact exclusively through platforms like Airbnb or VRBO that facilitate tax collection, you may not need separate state registration

Step 3: Insurance and Legal Compliance

Secure appropriate insurance coverage including:

General liability insurance
Property insurance with STR coverage
Consider umbrella policies for additional protection

Review HOA covenants if applicable, as homeowners associations can impose STR restrictions even where local governments are permissive.

Step 4: Property Preparation and Setup

Optimize your property based on market data:

Target Property Size: 2-bedroom listings dominate (48% of market), but 3+ bedroom properties serve larger groups
Essential Amenities: Ensure TV, air conditioning, WiFi, heating, hot water, coffee maker, smoke alarm, free parking, and bed linens
Competitive Positioning: Consider unique amenities to differentiate from the 25 active listings in the market

Required Documents, Permits, Licenses, and Guidelines

Current Requirements (Low Regulation Environment)

No city-specific registration required based on available information, but operators must:

State-Level Requirements:

Sales Tax Registration (NCDOR) - if not exclusively using tax-facilitating marketplaces
Local Lodging Tax Registration (Johnston County)
Business License (if applicable to business operations)

Federal Requirements:

EIN (Employer Identification Number) from IRS
Schedule E reporting for federal tax purposes
1099-K reporting (if using facilitating marketplaces)

Potential Future Requirements

Senate Bill 667 (currently stalled) could establish unified state regulations allowing cities to:

Require permits (max $25 fee)
Limit occupancy based on building codes
Restrict to one vehicle per bedroom
Require local agent within 50-mile radius
Enforce building and housing codes

Tax Obligations

North Carolina State Taxes:

4.75% state sales tax on accommodations
Local sales tax (Johnston County rate)
Local lodging taxes

Federal Taxes:

Income tax on net earnings
Self-employment tax on net earnings over $400

Specific Regulations: City, County, and State Level

City of Smithfield Level

Current Status: No city-specific STR ordinance identified in the provided sources. Smithfield operates under its Unified Development Ordinance (UDO) for general zoning compliance, but no specific STR regulations were found.

Johnston County Level

Current Status: No county-specific STR regulations identified. County-level tax collection applies.

State of North Carolina Level

NC Vacation Rental Act Definition:

Short-term rental: Less than 90 days for recreational/leisure/vacation purposes
Tenant must have another permanent residence for return

State Taxation Requirements:

State sales tax (4.75%)
Local sales tax
Local lodging taxes
NCDOR registration if not using facilitating marketplaces

Preemptive Legislation:

No statewide ban on short-term rentals
Senate Bill 667 (stalled) would establish uniform regulations across NC cities
Cities cannot prohibit STRs entirely, but may impose reasonable regulations

Examples of NC City Ordinances (for context):

Raleigh: Zoning permit required, prohibits special events, limits multifamily units to 25%
Asheville: Conditional zoning permits required from city council
Pinehurst: Banned STRs in residential zones (non-retroactive)

Market Performance and Investment Context

Current Market Metrics (2025)

Active Listings: 25 properties
Average Daily Rate: $138
Occupancy Rate: 42.5%
Median Annual Revenue: $19,636
Revenue Growth: 51% year-over-year

Seasonal Patterns

Peak Season: July (highest revenue month)
Low Season: January (lowest revenue month)
Peak ADR: September ($204+ for top-tier properties)
Minimum Stay: 2 nights most common (40% of listings)

Best Performing Areas

Downtown Smithfield
Smithfield Historic District
Shady Grove (family-friendly suburban)
Proximity to I-95 corridor

Contact Information for Local Authority

Smithfield Planning Department

Primary Contact for Zoning and Development Questions:

Mailing Address: Town of Smithfield Planning Department PO Box 761 Smithfield, NC 27577

Physical Address: Town Hall 350 East Market Street Smithfield, NC 27577

Phone: (919) 934-2086 Website: www.smithfield-nc.com

Key Staff:

Paul Embler, ASLA, Planning Director
Mark E. Helmer, AICP, CZO, Senior Planner/GIS Technician

North Carolina Department of Revenue

For State Tax Registration: Phone: (877) 252-3052 Website: www.ncdor.gov

Johnston County Tax Administration

For Local Taxes: Phone: (919) 989-5160 Website: Johnston County Government

Compliance Checklist

Before Starting Operations:

[ ] Verify zoning compliance with Smithfield Planning Department
[ ] Register for state/local taxes (if required)
[ ] Obtain appropriate insurance coverage
[ ] Review HOA documents for restrictions
[ ] Set up tax facilitation or manual tax filing
[ ] Prepare property with essential amenities

Ongoing Compliance:

[ ] Collect and remit state/local lodging taxes
[ ] File federal tax returns (Schedule E)
[ ] Maintain safety standards (smoke alarms, etc.)
[ ] Monitor for local ordinance changes
[ ] Keep records for tax and insurance purposes

Optional Best Practices:

[ ] Consider property management if not local
[ ] Join STR associations for advocacy
[ ] Monitor local government meetings for ordinance changes
[ ] Maintain guest communication systems

Sources and References

Primary Sources:

AirROI Smithfield Market Analysis 2025 - Market data and regulatory analysis
Smithfield Unified Development Ordinance - Zoning and development regulations
NC Short-Term Rentals Regulation: Cedar Management Group - State law and potential changes

Key Legislative References:

North Carolina Vacation Rental Act - State STR definition and regulations
Senate Bill 667 (2023) - Proposed unified STR regulations

Important Disclaimer: This guide is based on available information from the provided sources. Regulations can change quickly, and this analysis may not reflect the most current requirements. Always verify current regulations with local authorities before investing in or operating a short-term rental in Smithfield, North Carolina.

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