SC60 Tax Withholding: Forms, Deadlines, and Seller Refunds

When a nonresident sells real estate in South Carolina, the buyer is required to withhold a portion of the sale proceeds and send it to the state as a prepayment of the seller’s South Carolina income tax on the gain. This is SC nonresident real estate withholding, governed by South Carolina Code Section 12-8-580 and handled through two forms: the buyer files Form I-290 to remit the money, and the seller provides Form I-295 to document the gain or claim an exception.¹ For individual sellers in 2026, the rate is 5.21%; for corporate sellers, it is 5%.²

Who Counts as a Nonresident Seller

The rule reaches more sellers than the word “nonresident” suggests. It applies to:

Individuals whose permanent home is outside South Carolina on the date of sale.
Corporations incorporated outside the state.
Partnerships with a principal place of business outside the state.
Trusts administered outside the state.
Estates of a decedent whose permanent home was outside South Carolina at death.

The buyer carries the legal duty to withhold. A closing attorney, real estate agent, or lender is not on the hook for the buyer’s obligation, though if any of them actually withhold funds, they must remit them on time.¹ A buyer who fails to withhold becomes personally liable for the full amount that should have been collected.³

How Much Gets Withheld

The calculation turns on whether the seller hands the buyer a completed Form I-295 stating the gain from the sale.

With a Seller’s Affidavit

If the seller provides an I-295 disclosing the gain, the buyer applies the rate to the gain only. For individuals, partnerships, trusts, and estates, that rate matches South Carolina’s top marginal individual income tax rate for the year of sale, which is 5.21% for 2026. For corporate sellers and other nonresident entities, the rate is 5%.¹ Gain equals the sale price minus the adjusted basis, which usually starts with the purchase price and adds documented capital improvements.

Without a Seller’s Affidavit

Skip the affidavit and the same rates apply to the entire amount realized on the sale, not the gain. That is almost always a much larger number, so any seller with real basis in the property has a strong reason to complete the I-295.¹

The Net Proceeds Cap

If the required withholding would exceed the net proceeds the seller receives at closing, the buyer only has to withhold the net proceeds. A seller with little equity can see every dollar of their proceeds held, but they will not owe out-of-pocket cash at the table.¹

The individual rate has been dropping. It was 6% in 2025 and 5.21% in 2026, and further reductions are triggered whenever the Board of Economic Advisors projects at least 5% revenue growth over the prior fiscal year.² Confirm the current-year rate before running numbers.

When Withholding Does Not Apply

Several categories of transactions are excluded, most of them tracking federal tax-free or tax-deferred treatment. SC Revenue Ruling 09-13 lays them out:

Principal residence sales where the entire gain is excluded under IRC Section 121. If part of the gain exceeds the federal exclusion, withholding applies to that excess.
Like-kind exchanges under IRC Section 1031, provided the replacement property has already been identified at the time of sale.
Gifts and inheritances under IRC Section 102.
Tax-free exchanges of property for corporate stock (IRC Section 351) or partnership interests (IRC Section 721).
Tax-free corporate reorganizations.
Sales by federal, state, or local government agencies and by organizations exempt under IRC Section 501(a).
Condemnation proceeds excluded under IRC Section 1033.
Any calendar year in which the total to be withheld is under $350.

Installment sales are not on this list. When a seller finances part of the deal, the seller can either elect out of installment treatment for state purposes and pay the withholding upfront, or the buyer withholds on each installment payment as it comes in. The Department of Revenue can also extend the timeline case by case for seller-financed transactions.⁴

The Deemed Resident Exception

A nonresident seller who does ongoing business in South Carolina may qualify as a “deemed resident” and avoid withholding altogether. The bar is high. A nonresident corporation qualifies only if its principal place of business is in South Carolina and it does no business in its state of incorporation. All other nonresident sellers must have filed at least one South Carolina income tax return and be current on any others, have been in business in South Carolina during the last two taxable years (including the year of sale), intend to continue substantially the same business in the state, and, if a corporation or limited partnership, hold the appropriate certificate or registration to do business in South Carolina. The seller certifies these facts on Form I-295 and commits to reporting the sale on a timely South Carolina return.¹ A nonresident owner of a vacation home or investment property, without an active business presence, does not qualify.

Forms I-290 and I-295

Form I-295 is the seller’s document, given to the buyer at or before closing. It can either state the gain (to reduce the withholding base to gain rather than gross proceeds) or certify that the seller is a deemed resident or that the transaction is otherwise exempt. The buyer keeps it on file and only sends it to the Department of Revenue on request.⁵

Form I-290 is the buyer’s return. It captures the names and addresses of buyer and seller, the seller’s SSN, ITIN, or FEIN, the date of sale, and the withholding math: gain if an I-295 was provided, otherwise total amount realized, multiplied by the applicable rate.⁶ Both forms are on the Department of Revenue website at dor.sc.gov/forms.

Deadline and Payment

The buyer must file Form I-290 and remit the withheld funds by the 15th day of the month following the month the sale closed. A March 8 closing has an April 15 deadline.¹ Payment can be made electronically through MyDORWAY at mydorway.dor.sc.gov, or by mailing a check with a paper I-290. Payments of $15,000 or more must be made electronically under Section 12-54-250.⁷

How the Seller Gets the Money Back

The withheld amount is a prepayment, not the final tax bill. On the seller’s South Carolina income tax return for the year of the sale, the seller reports the capital gain and claims the withholding as a payment. If the withholding exceeds the actual tax owed on the gain, the balance comes back as a refund.⁶

A seller who does not want to wait for the annual return can request an earlier refund by filing an amended I-290 and checking the “Amended” box, but only before the tax year of the sale closes. After that, the credit has to be claimed on the income tax return. The same amended I-290 is how either party corrects a computational error made at closing.¹

1
South Carolina Legislature. South Carolina Code 12-8-580 – Withholding by Buyer of Real Property or Associated Tangible Personal Property From Nonresident Seller
2
South Carolina Department of Revenue. Information About H 4216
3
South Carolina Legislature. South Carolina Code Title 12 Chapter 8 – Income Tax Withholding
4
South Carolina Department of Revenue. SC Revenue Ruling 09-13 – Withholding on Sales of Real and Associated Tangible Personal Property by Nonresidents
5
South Carolina Department of Revenue. I-295 Seller’s Affidavit Nonresident Seller Withholding
6
South Carolina Department of Revenue. I-290 Nonresident Real Estate Withholding
7
South Carolina Department of Revenue. S Corporation