South Carolina rental property tax runs higher than what an owner-occupant pays on the same house, because rental real estate is assessed at 6% of fair market value instead of 4%. On top of that property tax, you owe state income tax on net rental income, and if you rent short-term or furnished you pick up accommodations tax, sales tax, and a business personal property tax on the contents. The single biggest surprise for new buyers is the point-of-sale reassessment: the moment you close, the property’s taxable value resets to your purchase price, and the 15% cap that had been shielding the prior owner disappears.
How Property Tax Is Calculated on a Rental
Two numbers drive your bill: the assessment ratio and the local millage rate. Rental properties, second homes, and all other non-owner-occupied real estate sit at a 6% assessment ratio, while owner-occupied primary residences are assessed at 4%.1South Carolina Legislature. South Carolina Code 12-43-220 – Classifications and Assessment Ratios That difference alone means a rental carries a 50% larger taxable base than the same house next door lived in by its owner.
The county assessor sets fair market value, usually from recent comparable sales. Your tax equals 6% of that value multiplied by the combined millage rate set by the county, school district, and any municipality covering the parcel. Millage rates vary widely across the state, so two properties with identical market values in different jurisdictions can generate very different bills.
When you buy a rental or convert your former residence into one, file a return with the county auditor to confirm the 6% classification. Skipping that step can produce assessment errors, including the auditor assuming furnishings that are not there.
Rental properties do not qualify for the homestead exemption. That exemption removes the first $50,000 of value from tax, but only for a permanent legal residence occupied by someone at least 65, totally and permanently disabled, or legally blind.2South Carolina Legislature. South Carolina Code Title 12 Chapter 37 – Assessment of Property, Section 12-37-250
The Point-of-Sale Reset You Need to Plan For
South Carolina counties reappraise all property on a five-year cycle, and any increase in fair market value during that cycle is capped at 15%.3South Carolina Legislature. South Carolina Code Title 12 Chapter 37 – Assessment of Property, Section 12-37-3140 A long-time owner in a hot market may be paying tax on a value well below what the property would actually sell for.
That protection ends the moment the property changes hands. When you buy, the assessor resets fair market value to the sale price and the 15% cap starts fresh from that new baseline.3South Carolina Legislature. South Carolina Code Title 12 Chapter 37 – Assessment of Property, Section 12-37-3140 If the seller had been shielded for several assessment cycles, your first tax bill can be dramatically higher than theirs. Do not underwrite a deal using the seller’s most recent tax bill; run the numbers off your purchase price at 6%.
Renovations get similar treatment. The cap does not apply to additions or improvements in the year they first become taxable, so a substantial rehab lands on top of the reset value rather than smoothed into it.
State Income Tax on Rental Income
South Carolina taxes net rental income through the individual income tax, following federal rules for what counts as gross rent and what you can deduct. The usual expenses apply: mortgage interest, property taxes, insurance, repairs, management fees, and depreciation over 27.5 years for residential rental property.4Internal Revenue Service. Publication 527 – Residential Rental Property
The rate structure is graduated. For 2025 the top marginal rate is 6%, a temporary reduction enacted in the FY 2026 state budget; the statutory 6.2% top rate is scheduled to return on July 1, 2026 unless extended.5South Carolina Department of Revenue. Individual Income Tax Rental income flows into your overall taxable income and is taxed at whatever bracket you land in.
Form SC1040 is due April 15. A federal extension automatically extends your state return with no separate filing required.6South Carolina Department of Revenue. 2025 SC1040 Individual Income Tax Form and Instructions For the 2025 tax year, the SCDOR pushed the filing deadline to October 15, 2026.5South Carolina Department of Revenue. Individual Income Tax
Out-of-State Owners and Withholding
If you live in another state and receive $1,200 or more a year in rent from South Carolina property, the payer is generally required to withhold tax at the top individual rate (currently 6%). For non-resident corporations, the withholding rate is 5%.7South Carolina Legislature. South Carolina Code Title 12 Chapter 8 – Income Tax Withholding, Section 12-8-540
Most individual investors are covered by an important exemption: withholding does not apply when the non-resident owns four or fewer residential rental units in South Carolina, including short-term rentals.7South Carolina Legislature. South Carolina Code Title 12 Chapter 8 – Income Tax Withholding, Section 12-8-540 Non-residents with five or more units can avoid withholding by registering with the SCDOR or the Secretary of State and giving tenants or property managers a Nonresident Taxpayer Registration Affidavit (Form I-312). Registration means you agree to SCDOR jurisdiction over your South Carolina tax liability, and the department can revoke the exemption if you stop cooperating.
Short-Term Rental Taxes
Any rental under 90 continuous days to the same guest is a transient accommodation and picks up both sales and accommodations tax. Rentals of 90 continuous days or longer to the same person are exempt from these transactional taxes.8South Carolina Legislature. South Carolina Code 12-36-920 – Tax on Accommodations for Transients
State-level tax on short-term accommodations totals 7%: a 5% sales tax plus a 2% accommodations tax, with the 2% portion allocated back to the county or municipality where it was collected.9South Carolina Department of Revenue. Licensing – Retail License10South Carolina Legislature. South Carolina Code 12-36-2630 – Disposition of Sales and Use Tax Revenue The tax applies to the full rental charge, including mandatory cleaning fees.
Many counties and municipalities add their own local accommodations tax on top. Rates vary, and the combined burden can easily exceed 10% in tourist areas. You collect from the guest, remit state tax to the SCDOR, and remit local tax to the county or municipal office that levies it.
Furnished Rentals and Personal Property Tax
Furnishings and appliances inside a rental unit are taxable as business personal property, assessed at 10.5% of their net depreciated value.1South Carolina Legislature. South Carolina Code 12-43-220 – Classifications and Assessment Ratios The assessed value is then multiplied by the same local millage rate applied to the real property, producing a separate bill for the contents.
Report the contents by filing Form PT-100 with the SCDOR through MyDORWAY. The department calculates the assessment and certifies it to your county, which bills you.11South Carolina Department of Revenue. PT-100 Instructions – Business Personal Property For a calendar-year filer, the return is due April 30. Miss the filing and the SCDOR estimates value from the prior year’s return and adds a 10% penalty.12South Carolina Department of Revenue. Business Personal Property Unfurnished long-term rentals where you provide no appliances or furniture generally avoid this obligation.
Registering and Licensing the Rental
Before collecting any sales or accommodations tax, register through MyDORWAY. Registration gets you a retail license and, where applicable, an accommodations tax license.13South Carolina Department of Revenue. Licensing – Retail License The retail license costs $50 and stays valid as long as you operate at the same location under the same ownership.14South Carolina Department of Revenue. Accommodations Tax Fact Sheet
A narrow exception applies if you provide transient accommodations for one week or less in any calendar quarter. In that case you don’t need a retail license and you can remit the tax annually by April 15 of the following year.14South Carolina Department of Revenue. Accommodations Tax Fact Sheet
South Carolina has no statewide business license, but many cities and counties require a local one for anyone earning income in their jurisdiction, including landlords. Whether you need one depends entirely on where the property sits.15South Carolina Business One Stop. Local Business License Fees usually track gross income and renew annually. Call the municipality before you list the property.
Deadlines and Penalties
County property tax bills generally arrive in the fall and are payable to the county treasurer. Miss the January 15 deadline (or 30 days after the notice was mailed, whichever is later) and a 3% penalty attaches. Miss February 1 and another 7% stacks on. Miss March 16 and a final 5% is added, for a total penalty of 15% of the unpaid tax.16South Carolina Legislature. South Carolina Code Title 12 Chapter 45 – Collection of Taxes, Section 12-45-180 Continued nonpayment can lead to a delinquent tax sale.
Short-term rental operators with a retail license remit accommodations and sales tax monthly or quarterly through MyDORWAY, depending on revenue volume. The small-operator annual filing (April 15) is reserved for those meeting the one-week-per-quarter exception.
Selling a Rental Property
Selling triggers federal and state capital gains tax. At the state level, you can deduct 44% of net long-term capital gain from your South Carolina taxable income, which effectively cuts the state rate on qualifying gains by nearly half.17South Carolina Legislature. South Carolina Code 12-6-1150 – Net Capital Gain Deduction At a 6% top rate, the effective state rate on long-term gains falls to roughly 3.36%.
The deduction is tied to net capital gain as defined federally, so gains on property held one year or less do not qualify. Depreciation recapture is taxed as ordinary income federally and does not receive the 44% state deduction. And the buyer inherits the point-of-sale reset, which can influence what a well-informed buyer is willing to pay.