Rental Real Estate
Short-Term Rental Tax Help in Charleston and Mount Pleasant
A short-term rental is taxed three ways at once: federal income tax, state and local accommodations taxes, and property tax. We prepare the return and check that the other two are being handled.
Whether a short-term rental loss can offset your other income turns on two facts: an average guest stay of seven days or less (or 30 days or less with significant personal services), and material participation that you can document. Separately, stays under 90 days generally carry South Carolina's 5% sales tax and 2% accommodations tax, plus local taxes that platforms do not always collect. Haigler CPA Group prepares the return, builds the participation record with you and reconciles the accommodations taxes.
How we handle it
Free consultation
We look at the property, where the parcel sits, how it is booked, how often you use it yourself and who does the work. That tells us which federal rules apply and which accommodations taxes you owe.
Test the stays and the days
From the platform reports and your own bookings we calculate the average period of customer use and count rental days against personal-use days. Those numbers decide whether the passive rental rules or the vacation-home rules govern the property.
Build the participation record
If the loss treatment depends on material participation, we work with you on an hour log tied to calendars, messages and invoices, and compare your hours with those of cleaners and any manager. It is far easier to build during the year than to reconstruct in April.
Reconcile accommodations taxes
We compare what Airbnb, VRBO or your manager collected and remitted with what was actually owed to the SCDOR and to Charleston County, and identify any direct bookings you need to report yourself.
Prepare the return and plan ahead
We prepare the federal and South Carolina returns, including depreciation, and if a cost segregation study makes sense we coordinate with the engineering firm that performs it and apply the result. Then we talk about next year: stays, hours and timing of improvements.
What to have ready
- Annual earnings and booking reports from each platform, with dates of every stay
- A list of direct bookings and the rent collected on them
- Your calendar of personal and family use, including days lent to friends
- Any hour log, calendar or message history showing the work you did
- Invoices from cleaners, property managers and contractors
- Closing statement and records of furniture and improvements
- Accommodations and sales tax returns filed, and your SCDOR retail license number if you have one
- Your City of Charleston or Town of Mount Pleasant permit and business license
- Your property tax bill showing the 4% or 6% assessment
Please don’t send tax documents or Social Security numbers through the website form. Bring them to the consultation. More in documents to bring to your CPA.
The federal rules that decide how losses are treated
| Your facts | What follows |
|---|---|
| Average period of customer use is 7 days or less | Not a rental activity under the passive activity regulations; losses are non-passive only if you materially participate |
| Average stay over 7 but no more than 30 days, with significant personal services provided by you or on your behalf | Also not a rental activity; same material participation question |
| Average stay over 30 days, or 8 to 30 days without significant personal services | Generally a rental activity; losses are passive under the ordinary rental rules |
| Personal use exceeds the greater of 14 days or 10% of the days rented at a fair rental | The property is treated as a residence and rental deductions are limited |
| Rented fewer than 15 days in the year while used as a residence | Rental income is excluded from income, and the rental expenses are not deducted |
Material participation, and why the log matters
There are seven material participation tests. The three that fit most short-term rentals are more than 500 hours in the year, doing substantially all the work yourself, or more than 100 hours with no other individual, including a cleaner or manager, putting in more hours than you. The regulations allow participation to be shown by any reasonable means, such as appointment books, calendars or narrative summaries; a daily log is not required, but a vague estimate after the fact is the version that fails in an examination.
Depreciation and cost segregation
A furnished rental contains property with shorter lives than the building, and 100% bonus depreciation is permanent for qualifying property acquired after 19 January 2025. South Carolina does not follow federal bonus depreciation, so the state return carries its own schedule. Cost segregation studies are performed by specialist engineering firms; we coordinate with them and apply the result rather than performing the study ourselves.
Accommodations taxes: state and local
South Carolina taxes accommodations rented for less than 90 consecutive days at the 5% sales tax plus a 2% accommodations tax, plus any local sales taxes, all reported to the SCDOR. Local accommodations taxes in Charleston County are separate and are not administered by the SCDOR.
| Tax | Rate | Paid to |
|---|---|---|
| State sales tax | 5% | SCDOR |
| State accommodations tax | 2% | SCDOR |
| Local sales taxes (local option, transportation, education in the City of Charleston chart) | 1% each | SCDOR |
| Charleston County accommodations fee (stays under 30 days) | 2% | Charleston County |
| City of Charleston accommodations tax | 2% | Charleston County, which collects it for the City |
| Town of Mount Pleasant accommodations fee | 1% | Charleston County, which collects it for the Town |
What the platform does and does not cover
According to the SCDOR, an online travel company that reserves the room and accepts payment is responsible for the state tax on the full booking. The City of Charleston warns that not every platform collects and remits local accommodations tax, and that the owner remains ultimately responsible even when a manager is used. Direct bookings are yours to report: the SCDOR requires a retail license unless you rent no more than one week per calendar quarter, in which case you still file and pay annually. Charleston County charges a late penalty of 5% per month, up to 100% of the fee.
Permits and property tax
Mount Pleasant
The Town requires a short-term rental permit, a business license and a certificate of occupancy. Renewal applications for 2026 are closed, and any remaining permits go to people on the Town's waitlist. Confirm a permit is available before you count on short-term income from a Mount Pleasant property.
City of Charleston
The City issues permits by category based on location: the Old and Historic District, the rest of the peninsula, and everywhere off the peninsula, including James Island, West Ashley, Johns Island and Daniel Island. Only commercial short-term rentals in the overlay zone are exempt from the requirement that the property be the owner's primary residence assessed at 4%. Permits must be renewed every year by the original issue date.
4% versus 6%
South Carolina assesses a legal residence at 4% only if you apply for it with the county; other residential property, including a dedicated short-term rental, is assessed at 6%. Our rental property article explains how the classification works and how it goes wrong.
Sources
- 26 CFR 1.469-1T — Rental activity exceptions (7-day and 30-day rules)
- 26 CFR 1.469-5T — Material participation tests
- 26 U.S.C. § 280A — Personal use of a dwelling unit
- SCDOR — Accommodations tax
- City of Charleston — Accommodations tax for short-term rentals
- Charleston County — Accommodations fee information
- City of Charleston — Short-term rental categories
- Town of Mount Pleasant — Short-term rentals
By Haigler CPA Group. Updated . Reviewed by Matthew Haigler, CPA on . The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
This is for you if
- You own an Airbnb or VRBO in Charleston, Mount Pleasant or elsewhere in South Carolina.
- You want a short-term rental loss to hold up against W-2 or business income.
- You are not sure the platform is paying all the accommodations taxes.
- You use the property yourself part of the year and need the day counts right.
- You are buying and want the tax and permit position checked before closing.
What sits outside this service
- Property management, guest communication and listing management.
- Performing cost segregation studies; specialist engineering firms do that and we apply the result.
- Legal advice on permits, zoning, HOA restrictions or ordinance appeals.
Start somewhere else if you need
Questions people ask about this
How is the average stay calculated for the 7-day rule?
Add up the days of every guest stay that ended in the year and divide by the number of stays. Days you or your family used the property are not customer stays. If the result is seven days or less, the property is not a rental activity for passive loss purposes, and material participation decides how the loss is treated.
Do cleaners' hours count against me for material participation?
They can. Under the 100-hour test, you must participate for more than 100 hours and no other individual can participate more than you, and that includes cleaners and managers. If a manager or cleaning crew puts in more hours, you need to meet a different test, such as more than 500 hours.
Does Airbnb pay South Carolina accommodations tax for me?
For bookings it reserves and takes payment for, the SCDOR treats the online travel company as responsible for the state tax. Local accommodations taxes are a different matter: the City of Charleston says not all platforms remit them, and the owner remains responsible. Direct bookings are always yours to report.
How many days can I use my rental myself?
If your personal use exceeds the greater of 14 days or 10% of the days it is rented at a fair price, the property is treated as a residence and your rental deductions are limited.
Can I get a short-term rental permit in Mount Pleasant?
The Town says 2026 renewal applications are closed and any remaining permits will be offered to people on its waitlist, which you join by emailing the Town. Our Mount Pleasant page covers the other local rules that affect rental owners.
Keep reading
- Rental Real EstateSchedule E, depreciation, 1031 exchanges, and the short-term rental loophole.
- Rental Property Tax in South CarolinaThe federal side of a rental is the same in Charleston as it is anywhere. What is different — and what costs Lowcountry owners the most money — is the layer underneath it: the assessment ratio, the accommodations taxes, and which jurisdiction you are actually in.
- Section 179 and Bonus DepreciationBoth write-offs are larger and more permanent than they have been for years. Neither of them is a reason to buy something, and one of them does considerably less in South Carolina than it does on the federal return.
- 1031 Exchange Timeline and RulesA 1031 exchange defers capital gains tax when you sell investment real estate and reinvest. The deadlines are unforgiving, they start before most people start planning, and one of them is shorter than almost everyone thinks.
Talk to a tax expert
Tell us what you are dealing with and we will tell you how we would handle it.