Rental Property Tax in South Carolina: The Part That Is Not Federal

Everything below is current as of August 2026. Local rates, permit rules and caps are set by ordinance and referendum and they move, so treat the local items as things to confirm for your address rather than facts about the region.

This piece is deliberately about the South Carolina layer. The federal mechanics — depreciation, the passive activity rules, and the timing of a like-kind exchange — are covered separately, and the 1031 timeline in particular is its own subject with its own unforgiving deadlines.

The 4% versus 6% question, which is a property tax question

South Carolina assesses property at a ratio of its fair market value, and the ratio depends on how the property is used. An owner-occupied legal residence is assessed at 4%. Other residential property — a second home, a rental, a property held for investment — is assessed at 6%. Property appraised as industrial by the Department of Revenue is assessed at 10.5%.

The difference is not marginal. Taxes on a residence qualifying for the 4% ratio are roughly a third lower than on a comparable residence at 6%, and there are further exemptions available to legal residences that do not apply at the higher ratio.

The part that costs people money is procedural: the 4% ratio is applied for, not granted. You file with the county assessor, having actually occupied the property as your primary residence, and each county publishes its own filing window — generally in the January following the tax year. Miss it and you pay at 6% for a year on a house you live in.

Two situations where this quietly goes wrong. An owner who converts a rental into a residence and never files. And an owner who moves out, rents the property, and leaves the 4% classification in place — which is not a saving but an exposure, because the classification is wrong and the county can correct it backward.

Short-term rentals attract a different tax

South Carolina imposes a 7% sales tax on charges for rooms, lodgings or sleeping accommodations furnished for less than 90 days to the same person. Additional guest charges added to the room charge — cleaning-adjacent services, in-room items, and similar — are generally taxed at 6%.

On top of that, many counties and municipalities impose their own local accommodations taxes. Those are not administered by the SCDOR. You report and pay them to the jurisdiction where the property sits, and you have to ask that jurisdiction what it charges, because there is no single place that lists it for you.

Platforms collect some of these and not all of them. The rule of thumb we would offer is that a platform's tax collection is a starting point for your reconciliation, not a substitute for it. Owners who assumed otherwise generally find out in the form of an assessment covering several years.

Where you are matters more than the address suggests

The federal rules that interact with all of it

Three points, because they change which South Carolina questions matter.

• Residential rental property is depreciated over 27.5 years, and the depreciation is recaptured on sale whether or not you claimed it. "I did not take depreciation" is not a defense; the recapture is computed on depreciation allowed or allowable.
• Rental losses are generally passive. A special allowance of up to $25,000 exists for active participants, and it phases out between $100,000 and $150,000 of modified adjusted gross income. Above that range, losses are suspended until there is passive income or a disposition.
• A short-term rental where the average period of customer use is seven days or less is generally not a rental activity for these purposes at all. That takes it out of the passive rental rules and into the ordinary material participation test — which is the single most consequential distinction in this area and the one most often applied incorrectly in both directions.

That third point is why the same beach property can produce a usable loss for one owner and a suspended one for another. It turns on documented facts about participation, not on the property.

The tax nobody budgets for

South Carolina taxes business personal property. A furnished short-term rental contains a great deal of it — furniture, appliances, linens, equipment — and that is reported and taxed separately from the real property. Owners who bought furnished and never filed are usually unaware there was a filing to make.

Add the municipal business license, which is a separate obligation from any state tax registration and is levied where you operate rather than where you live, and an owner with properties in two jurisdictions can need two.

What to do with this

If you own one rental and have owned it for years, the checkable items are short: is the assessment ratio correct for how the property is used now, are the local accommodations taxes actually being filed by you rather than assumed to be handled, and is the business personal property return being made.

If you are buying, the order is the opposite of the intuitive one. Establish the jurisdiction, then the permit position, then the tax treatment, then the price. A property that cannot be permitted for the use you intend is not a bargain at any number.

This is general information about how the rules work rather than advice about your property. Which of them apply depends on facts — occupancy, participation, jurisdiction, average stay — that have to be looked at rather than assumed.