Imagine two identical houses on the same street in the same North Carolina town. House A is listed on Airbnb and produces $50,000 per year in rental revenue. House B is used as a family’s full-time residence. Assuming the two houses are otherwise the same, should House A be appraised at a higher value for property tax purposes than house B?
In this 2022 post, I argued that the answer should be no. The fact that a property is listed on Airbnb should not, by itself, justify a higher tax appraisal than an identical house that is not listed on Airbnb but could be if the owners so chose. The Machinery Act mandates that tax appraisals focus on true market value. If both House A and House B would sell for essentially the same price, then both houses should be appraised at essentially the same tax value.
A recent Property Tax Commission appeal addressed a similar question and came to a similar conclusion. In the appeal of Joseph Minicozzi, 25 PTC 0793 (March 20, 2026), the PTC concluded that Buncombe County’s schedule of values did not violate the Machinery Act by treating short-term rental (STR) homes the same as other residential property.
The PTC case was a bit unusual in that it concerned an appeal of the county’s schedule of values, not an appeal of a particular property appraisal. Under G.S. 105-317(b), counties adopt uniform schedules, standards, and rules that govern their general reappraisals. G.S. 105-290(c) allows county property owners to challenge those schedules directly before the PTC. For such a challenge to prevail, the taxpayer must overcome a presumption in favor of the schedule’s validity by demonstrating the schedule’s illegality or arbitrariness through competent, material, and substantial evidence. In re McElwee, 304 N.C. 68 (1981).
Buncombe adopted its schedule in September 2025 for its planned 2026 reappraisal. (That appraisal was later postponed to 2027; read this post for details.) Joseph Minicozzi, a county resident and property owner, challenged the schedule on the grounds that it improperly treated short-term rental homes the same as owner-occupied homes. He contended that STRs were commercial businesses that required appraisal under the income approach rather than using the sales comparison approach. (See page 6 of this SOG bulletin for a quick explainer on the different appraisal approaches.) Minicozzi alleged that this appraisal approach understated STR property values and inappropriately shifted the tax burden to owner-occupied housing.
The PTC rejected Minicozzi’s argument, primarily because he could not produce evidence that the county’s sales comparison approach systematically undervalued STR properties. Let’s dive into the details of that decision.
G.S. 105-283 requires appraisal at “true value,” meaning market value. The goal is to estimate “the price a property would bring in a transaction between a willing, financially able buyer and a willing seller, neither compelled to act and both reasonably knowledgeable about the property’s current and potential uses.”
Minicozzi's challenge to the schedule of values relied on G.S. 105-317, which directs assessors to consider factors including income and adaptability to commercial uses. But the fact that assessors must consider income during the appraisal process does not require them to use the income approach. The PTC explained that the listed factors are aids to estimating market value; they do not dictate a particular appraisal method.
Nor did professional appraisal standards compel the use of the income approach for STR properties. The PTC read the relevant International Association of Assessing Officers standards as expressing a general preference for applying the income approach to income-producing property when reliable data are available. It did not read that preference as a requirement that every rental house be appraised that way. The county presented evidence as to why it concluded the sales comparison approach was preferable to the income approach for STR properties. In particular, the county pointed to unreliable data on which properties were being used as STRs and STR income.
The county also argued that the “highest and best use” of residential property in the county is year-round residential use (meaning owner-occupied or long-term rental). Because accepted appraisal standards require appraisal at a property’s highest and best use, the county concluded that all residential property should be appraised as if it were year-round residential use and not STR use. From the county’s PTC brief:
The Uniform Standards of Professional Appraisal Standards (USPAP) states under Standards Rule 1-3(b) that “When necessary for credible assignment results in developing a market value opinion, an appraiser must: develop an opinion of the highest and best use of the real estate”. . .
The data indicates that the income generated by STR’s is not substantially higher than that from long-term residential leasing, reinforcing the notion that the highest value is derived from using the properties as permanent residences. When applying standard valuation methods, the difference in market values between STR’s and long-term residential use is minimal, further confirming that the STR rental model does not provide sufficient value to outweigh its investment risks.
Given these factors, residential properties in Buncombe County are more appropriately considered for year-round residential use. This also confirms that the appropriate approach to value is the sales comparison approach and that STR’s should not be delineated in the Schedule.
Because Minicozzi did not present sufficient evidence to overcome the presumption that the county’s schedule of values is valid, the PTC granted the county’s motion to dismiss the appeal.
This PTC case clearly supports the decision to appraise STR property the same as “regular” residential property. While I have not polled all 100 counties, anecdotally it appears that most North Carolina assessors mirror Buncombe County’s approach and do not apply special appraisal rules for STR property.
That said, the Minicozzi decision does not stand for the proposition that rental potential should never affect a home’s market value. Assessors should remain attentive to market evidence that legally available uses, rental restrictions, or particular property features affect what buyers will pay.
