Rental Property Taxes in South Carolina (2026 Guide)

1. Property Tax: the 4%-vs-6% Trap

This is the single most important South Carolina landlord fact. SC assesses property by an assessment ratio, and rentals get the worse one (SC Code 12-43-220):

• Owner-occupied legal residence — 4% of fair market value.
• All other real property, including rentals — 6%, a 50% higher taxable base for an identical home.

2. Income Tax Reform (H.4216, New for 2026)

H.4216 (signed March 30, 2026; effective tax year 2026) replaced South Carolina's old 0%/3%/6% schedule with a two-rate structure and a new starting point:

• 1.99% on taxable income under $30,000; 5.21% minus $966 at $30,000 and above (§12-6-510(C)(1)). The top rate drops from 6.0% to 5.21%.
• Federal AGI is now the starting point (previously federal taxable income).
• New SC Income Adjusted Deduction (SCIAD) — $15,000 single/MFS, $22,500 head of household, $30,000 MFJ — subtracted from federal AGI, with an AGI-based phase-out at higher incomes.

3. The 44% Capital-Gains Deduction

South Carolina lets individuals deduct 44% of net long-term capital gains (held more than one year) under SC Code 12-6-1150 — and H.4216 left it intact. On a rental sold after more than a year, only 56% of the gain is taxed, so the effective top rate on a long-term gain is about 2.92% (5.21% × 0.56). That is a meaningful break on disposition.

4. Bonus Depreciation Add-Back

South Carolina does not conform to federal bonus depreciation (§168(k)) and requires an add-back — you keep the bonus federally but reverse it for SC and depreciate on a regular schedule. Keep a separate South Carolina depreciation basis so the two reconcile year to year.

5. Deed Recording Fee

South Carolina's transfer tax is the deed recording fee: $1.85 per $500 of value (0.37%) — $1.30 state + $0.55 county (SC Code 12-24-10) — paid by the seller. There is no separate percentage mortgage tax.

6. LLC Fees ($0 for Pass-Throughs)

A standard member-managed South Carolina LLC has no annual report and no annual fee — one of the cheaper states to hold rentals in an LLC. The exception: an LLC that elects to be taxed as a corporation must file an annual report and pay the SC corporate license fee.

7. Rent Control

South Carolina prohibits local rent control statewide (SC Code 27-39-60) — no county or municipality may regulate the rent charged for residential or commercial rental property. You set rents at market.

8. Security Deposit Rules

• No statutory cap on the deposit amount (SC Code 27-40-410).
• Return within 30 days of the tenancy ending and the tenant providing a forwarding address, with a written itemized statement of deductions.
• Multi-unit disclosure — if you rent 4 or more adjoining units under different deposit standards, you must post or give tenants a written statement of how deposits are set, or you lose the right to withhold the excess.

9. How SheltrIQ Helps South Carolina Landlords

South Carolina's 2026 reform changed the math — SheltrIQ keeps your return on the current rules:

• H.4216-current income modeling — applies the new 1.99%/5.21% schedule from a federal-AGI base with the SCIAD, not the stale 0/3/6% voucher.
• Disposition modeling — applies the 44% long-term capital-gains deduction so a rental sale is taxed at its true ~2.92% effective state rate.
• Bonus-depreciation tracking — flags the SC add-back and keeps a separate South Carolina basis.
• AI Schedule E classification — sorts each expense to the right line so your SC income starts from an accurate federal return.