Tax Considerations for South Carolina Vacation Rental Property Owners
February 25, 2025
Owning a vacation rental property in South Carolina can be a rewarding investment, but it also comes with important tax responsibilities. From collecting accommodations taxes to understanding deductions, knowing your obligations is essential to making the most of your rental property. At Deserving Vacations, we’re here to simplify your journey by providing helpful insights and connecting you with the resources you need.
While we’re not tax professionals, this guide offers an overview of key tax considerations for South Carolina vacation rental property owners. Be sure to consult a qualified tax advisor for personalized guidance.
Accommodations and Sales Taxes
In South Carolina, short-term rental income (for stays less than 90 days) is subject to both accommodations and sales taxes. These taxes must be collected from renters and remitted to the appropriate authorities. Sound complicated? Here’s a breakdown:
State Sales Tax | 7%
State Accommodations Tax | 2%
- Local Accommodations Taxes | These vary by county and municipality. Examples include:
Charleston County: 2%
Isle of Palms: 1%
Folly Beach: 2%
Visit the South Carolina Department of Revenue (SCDOR) for a complete list of local tax rates and specific guidelines.
Exemptions: Some properties may qualify for exemptions from accommodations taxes, such as long-term rentals (over 90 days) or properties owned by charitable organizations. For details on exemptions, consult the SCDOR’s exemptions guide.
Registration: Vacation rental properties must be registered with the SCDOR to ensure compliance. You can start the registration process on their website here. Property management companies, like Deserving Vacations, can handle tax collection and remittance on your behalf, simplifying the process.
Reporting Rental Income
Rental income from your vacation property must be reported on both your federal and South Carolina state tax returns. This is typically done on Schedule E of your federal tax return. However, there’s an exception:
The 15-Day Rule: If you rent your property for fewer than 15 days in a year and also use the property personally for more than 14 days or 10% of the rental days (whichever is greater), you may qualify for a federal and state tax exemption. In this case, rental income is not taxable and does not need to be reported.
For those renting for longer periods, it’s crucial to accurately track all rental income and expenses for proper reporting.
Tax Deductions for Vacation Rentals
Owning a vacation rental property offers several tax benefits through eligible deductions. Here are some common examples:
Property Maintenance and Repairs: Costs for cleaning, landscaping, pest control, painting and repairs are deductible.
Property Management Fees: Fees paid to companies like Deserving Vacations are deductible.
Mortgage Interest and Property Taxes: These can be deducted from your rental income.
Utilities and Insurance: Electricity, water, gas, internet, trash removal and rental property insurance are deductible.
Depreciation: The IRS allows you to deduct the structure’s value over time (typically over 27.5 years for residential rental properties).
Home Office Deduction: If you use a dedicated space in your home exclusively for managing the rental property, a portion of home-related expenses may be deductible.
Travel Expenses: Travel for legitimate business purposes, such as repairs or guest meetings, may qualify for deductions if properly documented.
Note: Keep detailed records and receipts to substantiate your deductions.
Property Taxes
In South Carolina, vacation rental properties are typically assessed at a higher rate than primary residences:
Primary residences: Assessed at 4%.
Vacation rentals and secondary homes: Assessed at 6%.
These properties are often classified as commercial, resulting in higher property taxes. Be aware that renovations or changes in ownership may trigger reassessment. You can check your property’s tax valuation or appeal an assessment by contacting your county tax office.
Tax Tools and Resources
Managing taxes for a vacation rental property can feel overwhelming, but the right tools and professionals can make it easier:
Tax Software: Platforms like TurboTax or QuickBooks Solopreneur can help organize your rental income and expenses.
Tax Advisor: A qualified tax professional can ensure compliance with state and federal regulations while helping you maximize deductions.
Property Management Company: At Deserving Vacations, we handle tax remittance and provide clear documentation to simplify your tax responsibilities.
SCDOR Website: Visit the South Carolina Department of Revenue for forms, publications and up-to-date local tax information.
IRS Publication 527: This IRS publication provides detailed guidance on residential rental property.
Why Work with Deserving Vacations?
As an Isle of Palms property management company, we specialize in making vacation rental ownership stress-free. While we’re not tax experts, we ensure all tax collection and remittance obligations are handled seamlessly, giving you peace of mind. We also provide our homeowners with the tools and resources they need to stay organized and informed.
Need help managing your vacation rental property on Isle of Palms, South Carolina? Contact us today to learn how we can support you!
Make the Most of Your Isle of Palms Vacation
Founded in 2009, Deserving Vacations property management has welcomed over 28,000 individual guest reservations across our diverse portfolio of properties and garnered thousands of 5-star reviews. Curious to learn more about Isle of Palms or have specific questions? Don't hesitate to reach out to us! You can contact Deserving Vacations at 843-906-1227, email us at nathan@deservingvacations.com, or use the convenient contact form located at the bottom of our website. Join us on this exciting journey as we continue to redefine excellence in the vacation rental industry!