Folly Beach, SC Airbnb & Short-Term Rental Regulations 2026
Everything you need to know about operating a legal short-term rental in Folly Beach, South Carolina. Licensing, taxes, zoning, and 2026 compliance requirements.
Folly Beach STR Regulation Overview
Folly Beach is one of the most tightly controlled vacation-rental markets on the South Carolina coast. After a 2023 voter referendum, the city capped investor (non-owner-occupied) short-term rental licenses at 800 — a limit the South Carolina Court of Appeals upheld in March 2026, ruling it regulates business licenses rather than zoning. With the cap fully subscribed, a waitlist roughly 185-200 names deep, and no new licenses projected, buying into the investor side of this market means inheriting an existing licensed property rather than registering a new one. Owner-occupied rentals (OSTR) sit outside the cap and remain available, though they are limited to 72 rental days per year. The trade-off for this scarcity is exceptional performance: Folly ranks in the national top few percent for revenue, ADR, and occupancy. In December 2025 the council advanced minor ordinance amendments, and in 2026 the City Council reopened the ordinance for broader review under its strategic plan, so rules around the cap, license transfers, and the waitlist may shift. For now, a transferable ISTR license is the single most valuable asset in the market.
Folly Beach STR Quick Facts
| STR Legal? | Yes |
| License Required | Yes |
| License Cost | $245/year base (OSTR/ISTR, covers first $2,000 of income) plus $2.75 per additional $1,000; separate registration permit adds ~$17.50 per $1,000 of income |
| Lodging Tax | ~14% combined |
| Occupancy / Density Caps | Investor short-term rentals (ISTR) capped at 800 citywide licenses; the waitlist (~185-200 deep) is not open and no new licenses are projected for the next business-license year. Owner-occupied rentals (OSTR) are exempt from the 800 cap but are limited to 72 rental days per year. |
| Primary Residence Required | No |
800-license investor cap (court-upheld)
A 2023 referendum capped investor short-term rentals (ISTR) at 800 citywide. The South Carolina Court of Appeals upheld the cap in March 2026, ruling it regulates business licenses and is not an unlawful zoning change. The cap is full and no new ISTR licenses are projected for the coming license year. Plaintiffs signaled intent to seek rehearing/Supreme Court review, and a separate trial-level challenge remains pending.
Owner-occupied rentals are exempt but day-limited
Owner Occupied Short Term Rentals (OSTR) on primary residences (taxed at the 4% rate) are not counted against the 800 cap and can still apply, but they are limited to 72 rental days per year. Investor (second-home) properties carry the 6% property-tax rate, have no annual day cap, and are subject to the 800-license limit.
Business license fees
OSTR and ISTR business licenses begin at $245 (covering the first $2,000 of income) plus $2.75 per additional $1,000 of gross income. Long-term rentals start at $45. A separate registration permit adds roughly $17.50 per $1,000 of income.
Frozen waitlist
Because the cap is full, the city maintains a waitlist of roughly 185-200 entries. The waitlist is not currently open, and no new licenses are projected to become available for the next business-license year.
Renewal and minimum-use rules
Short-term rental business licenses renew annually, with renewals running from March 10 and due by April 30; registration renewals are due by June 1. A property must be rented at least 28 days per year to maintain its rental license.
Ordinance amendments and 2026 review
In December 2025 the council advanced five amendments (covering renovations, military exemptions, tax-status classification, and emergency-contact posting) that did not change the 800 cap, waitlist, or fees. Under its 2026 strategic plan, the City Council reopened the short-term rental ordinance for comprehensive review, holding public-input sessions in May 2026, so the cap, transfers, and waitlist may evolve.
Folly Beach STR Market Performance
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Frequently Asked Questions
For investor (non-owner-occupied) properties, effectively no. The city's 800-license cap on investor short-term rentals (ISTR) is full, the waitlist (about 185-200 names) is not open, and no new licenses are projected. The practical path is buying a property that already holds a transferable ISTR license. Owner-occupied rentals on a primary residence are exempt from the cap and can still apply, but they are capped at 72 rental days per year.
The cap, approved by Folly Beach voters in a 2023 referendum, limits investor short-term rental (ISTR) licenses — those on second homes that are not owner-occupied — to 800 citywide. The South Carolina Court of Appeals upheld it in March 2026, ruling it regulates business licenses rather than zoning. Owner-occupied short-term rentals (OSTR) are not counted against the cap and remain available, though they are limited to 72 rental days annually.
Owner-occupied (OSTR) and investor (ISTR) business licenses start at $245, which covers the first $2,000 of gross income, then add $2.75 per additional $1,000 of income. A separate registration permit costs roughly $17.50 per $1,000 of income. Licenses renew annually, with business-license renewals running from March 10 and due by April 30.
Guests pay South Carolina state taxes (a combined 7% state sales and accommodations tax) plus Charleston County's 3% accommodations tax and local Folly Beach accommodations and beach-preservation fees, for a combined rate of roughly 14-15% on gross rental receipts. Hosts are responsible for collecting and remitting these taxes; booking platforms collect some but not all, so confirm current rates with Charleston County and the SC Department of Revenue. Investor STR properties are also assessed at the higher 6% property-tax rate rather than the 4% owner-occupied rate.
Performance is strong — Folly Beach ranks in the national top few percent for revenue, average daily rate, and occupancy, with ADRs around $400+ and occupancy near 70%. The catch is access: the 800-investor-license cap makes new investor entry nearly impossible, so value concentrates in existing licensed properties. Confirm a transferable license is in place before buying.
Informational only — verify current rules with local authorities before investing. Sources: cityoffollybeach.com · abcnews4.com · www.postandcourier.com · www.postandcourier.com · codelibrary.amlegal.com
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