South Carolina Vacation Rental Taxes for Out-of-State Owners

1. Who this guide is for

Owners of a vacation rental on the South Carolina coast (Myrtle Beach and the rest of the Grand Strand, Pawleys Island, Hilton Head, Charleston and the nearby islands) who live somewhere else and rent the place to guests by the night or the week. South Carolina's accommodations tax covers sleeping accommodations rented for less than 90 consecutive days, and the Department of Revenue lists condos and rooms in a home alongside hotels. A typical vacation rental is squarely inside it.

2. The taxes on every stay

A stay supplied to the same person for 90 continuous days or more is outside the tax. The Department also lists an exception for a small facility on the premises where the owner lives, which doesn't fit a vacation property the owner visits from out of state.

3. Who collects: you, your manager or the platform

The Department of Revenue's rule is simple: whoever books the stay is responsible for the tax. In practice that splits three ways.

• Booked through an online travel company (VRBO, Expedia and the like) that reserves the stay and takes the payment: the company is responsible for the state tax on the full amount of the booking.
• Booked through a property management company: the manager collects and reports the tax under its own Retail License, not yours. (The Department also lists real estate agents, brokers and listing services among those who may be the one booking.)
• Booked by you: repeat guests, friends of friends, your own website. Those stays are yours to collect and report.

The Retail License. An owner who books any stays directly needs a Retail License, and an owner with more than one rental needs one for each location. An owner who rents exclusively through a manager or online travel company doesn't need one. Once you have a license, a return is due for every filing period, even one where every booking went through the platform (you report zeros). That's the usual source of non-filer notices for owners who assumed the platform handled everything.

Registering and filing. The Retail License and the returns live on MyDORWAY, the Department's online portal, and accommodations returns have to be filed electronically. If you sell the property or stop booking directly, close the account there, after filing every period up to the closing date. Tax paid twice, once by you and once by the manager or platform, can be recovered by amending the returns and uploading proof of what the manager or platform paid.

4. County and town taxes

State law lets a county or a municipality impose its own local accommodations tax by ordinance, on the same accommodations the state taxes, paid to that local government rather than to the Department of Revenue. The Department says plainly that many counties and municipalities impose local accommodations taxes it doesn't administer, and sends owners to the county or municipal office where the property sits. Two examples from the coast show why that step matters:

• Horry County (Myrtle Beach and much of the Grand Strand). The county's Hospitality Fee applies to transient accommodations, not only to restaurants. The county tells owners that if a property manager arranges the stays, they should make sure the manager is collecting and remitting it, and that a business inside city limits needs to contact the municipality as well.
• Hilton Head Island. The Town requires anyone renting sleeping accommodations for less than 90 days to open an account with its Revenue Services Office for its accommodations tax and beach preservation fee, file even when there were no rentals, and hold a business license if they own a rental property or a share of one.

One name can mislead. South Carolina's Local Hospitality Tax Act covers prepared meals and beverages, so a "hospitality tax" usually isn't about your rental, but Horry County's Hospitality Fee, a separate levy, is. Check each county and town tax by name. For a property in Georgetown County, Charleston County or any other coastal county, the same questions apply: which local taxes reach a rental, which account each one needs, and whether your manager or platform files it or you do.

5. South Carolina income tax when you live elsewhere

The Department of Revenue treats you as a nonresident if your permanent home is outside South Carolina all year. A nonresident with rental property in the state files the SC1040 with Schedule NR, the nonresident schedule. Rents received, less all related expenses, are allocated to South Carolina, unless the property is used in or connected with your trade or business (S.C. Code 12-6-2220).

• It's the net figure, rent less related expenses, that is allocated to South Carolina, so good expense records matter here as much as on the federal return.
• Your home state may tax the same rental income. Whether it gives you a credit for the South Carolina tax, and how much, is your home state's rule, so the two returns should be prepared together.
• If the rental is owned through a partnership, an S corporation or an LLC taxed as either, South Carolina lets the entity file a composite return for nonresident owners instead of each owner filing separately. How the tax is figured for each owner depends partly on whether that owner has other South Carolina income (the Department's Form I-338 affidavit).

6. Property tax: why a rental is assessed differently

South Carolina assesses property at a percentage of its fair market value, and the percentage depends on how the property is used (S.C. Code 12-43-220). A legal residence occupied by an owner who is domiciled there is assessed at 4%. All other real property, which includes second homes and rentals, is assessed at 6%.

The legal residence ratio isn't available to an owner who lives in another state: the application certifies that the property is where you are domiciled and that no member of your household claims to be a resident anywhere else. The statute also ties the ratio to a residence that isn't rented for more than 72 days in a calendar year. If you bought a property that had the 4% ratio under its prior owner, the statute requires a new owner to apply again; the prior owner's classification doesn't carry over.

7. The federal side

Nothing about South Carolina changes the federal rules, and two of them matter most for a beach rental. If your average guest stay is seven days or less, the rental isn't automatically a passive activity, and with material participation its losses can offset other income: the short-term rental loophole, explained. If you or your family also use the place, the days you spend there change what you can deduct: renting a vacation home you also use. And on a more expensive property, a cost segregation study may be worth a look.

8. How we help rental owners

We're a Louisville firm, licensed in South Carolina and eight other states, and we work with owners wherever they live through a secure client portal, so it makes no difference which state you call home. For South Carolina rental owners that usually means:

• Matching what your platform and manager reports say they remitted against every state and local tax the property owes, stay by stay.
• Setting up, or closing, the Retail License and local accounts so the notices stop.
• Preparing the SC1040 and Schedule NR alongside your home-state and federal returns, so the credit for tax paid to South Carolina is claimed correctly.
• Reviewing average stay, material participation and personal-use days before the federal return, not after.

9. Common questions