Understanding South Carolina Capital Gains Tax on Real Estate: A Simple Guide for Homeowners
If you’re planning to sell a property in South Carolina, one of the most important things to understand is capital gains tax on real estate. Many homeowners are surprised by how much they might owe after a sale, especially if their property value has increased. In this blog, we’ll explain everything you need to know about South Carolina capital gains tax on real estate—in plain, simple English.
Let’s break it down step by step.
What Is Capital Gains Tax?
Capital gains tax is the tax you pay on the profit you make when you sell something for more than you paid for it. This includes houses, land, rental properties, and other real estate.
Example:If you bought a house for $150,000 and sold it for $250,000, your profit (called a capital gain) is $100,000. This profit may be taxed.
Do You Always Pay Capital Gains Tax When Selling Property?
Not always. There are exemptions and ways to reduce the tax, especially if the property was your primary home.
Here’s when you might not have to pay:
You lived in the home for at least 2 of the last 5 years before selling it.
You haven’t claimed the capital gains tax exemption on another home in the past 2 years.
Your profit is less than $250,000 if you’re single or $500,000 if married and filing jointly.
If you meet these conditions, you may not owe any federal capital gains tax.
How Does Capital Gains Tax Work in South Carolina?
When selling real estate in South Carolina, you may owe both federal and state capital gains taxes.
Federal Capital Gains Tax Rates:
These rates depend on how long you owned the property.
Short-term gains (owned less than a year): Taxed like regular income (10% to 37%)
Long-term gains (owned over a year): Usually taxed at 0%, 15%, or 20%
South Carolina Capital Gains Tax on Real Estate:
South Carolina does not have a special capital gains tax rate. Instead, the state treats capital gains as regular income. This means the profit from your property sale is taxed at your normal state income tax rate, which can range from 0% to 7%.
How to Calculate Capital Gains on Real Estate
Here's a simple way to calculate your capital gains:
Selling Price – Purchase Price – Selling Costs – Improvements = Capital Gains
Let’s look at an example:
You bought a house for $180,000
You sold it for $300,000
You spent $10,000 on improvements (like a new roof or kitchen)
You paid $10,000 in closing and selling costs
Capital Gains = $300,000 - $180,000 - $10,000 - $10,000 = $100,000
This $100,000 may be taxed unless you qualify for the exemption mentioned earlier.
Tips to Reduce South Carolina Capital Gains Tax on Real Estate
Here are a few smart ways to lower or avoid paying too much in taxes:
1. Live in the Home Before Selling
If you’ve used the property as your main home for at least 2 out of the past 5 years, you may avoid taxes on a large part of the gain.
2. Track Home Improvements
Keep receipts for any home improvements. These costs reduce your taxable profit when you sell.
3. Sell in a Low-Income Year
If your income is low the year you sell, your capital gains tax rate may also be lower.
4. 1031 Exchange for Investment Properties
If you’re selling an investment or rental property, you might qualify for a 1031 Exchange. This allows you to delay paying taxes by reinvesting the money into another property.
Do You Have to Pay at Closing?
South Carolina usually requires a withholding tax at closing for out-of-state sellers. If you're not a South Carolina resident, 7% of the gain may be withheld at closing for taxes. However, you can apply to reduce or eliminate this if you don’t owe that much.
Should You Talk to a Tax Expert or Real Estate Professional?
Yes! Selling a house involves more than just finding a buyer. A tax advisor or real estate expert can help you:
Understand how much tax you’ll owe
Take steps to reduce your tax bill
Make smart selling decisions based on your financial situation
At RedHead Home Properties, we help South Carolina homeowners sell quickly and stress-free, especially if you're worried about taxes or paperwork. We buy homes as-is, with no repairs, fees, or commissions.
Why Homeowners Choose RedHead Home Properties
Here’s how we help make the process easy:
✅ Fast Cash Offers✅ No Repairs or Cleaning Needed✅ No Realtor Fees✅ We Handle the Paperwork✅ Experience with Capital Gains and Tax Situations
If you’re thinking of selling your house and want to avoid the headaches of the traditional selling process, we’re here to help.
Final Thoughts: Don’t Let Taxes Surprise You
Understanding South Carolina capital gains tax on real estate can save you money and reduce stress. If you’re selling your home or an inherited property, knowing your options and potential tax bill is key.
Ready to sell your home without the stress and confusion?
👉 Contact RedHead Home Properties today and get a fair cash offer.We’ll guide you through the selling process and help you make the best decision for your situation.