It’s one of the first questions homeowners ask us: “If I sell, how much of this is the government going to take?”
The good news is that most people who sell a home in South Carolina owe zero capital gains tax. But “most” isn’t “all,” and there are a couple of line items at closing that surprise people. Here’s the honest version.
1. Capital gains tax: most sellers owe nothing
The IRS lets you exclude a big chunk of your profit from taxes when you sell your primary residence. If you owned the home and lived in it for at least 2 of the last 5 years, you can exclude:
- $250,000 of profit if you file single
- $500,000 of profit if you’re married filing jointly
That’s profit, not sale price. If you bought a house in Taylors for $185,000 and sell it for $310,000, your gain is roughly $125,000 — well under the limit. No federal capital gains tax.
Where people do owe: rental properties, second homes, land, or a house you haven’t lived in for 2 of the last 5 years. Those don’t qualify for the exclusion.
2. If you inherited the house, the math is usually in your favor
This trips up a lot of families. When you inherit a property, your cost basis “steps up” to the home’s fair market value on the date the previous owner passed away — not what they paid for it in 1978.
So if your mom’s house was worth $220,000 when she died and you sell it eight months later for $225,000, your taxable gain is about $5,000, not $200,000. That’s why selling an inherited house quickly often has a smaller tax bite than people fear.
3. South Carolina’s piece
South Carolina taxes capital gains as regular income, but it allows a 44% deduction on net long-term capital gains (assets held more than a year). So even in the cases where you do owe state tax, the effective rate is meaningfully lower than the headline income tax rate.
4. Deed stamps — the one almost everybody pays
This is the closing-cost item people forget. South Carolina charges a deed recording fee (locals call them “deed stamps”) of $1.85 for every $500 of the sale price — about $3.70 per $1,000. By custom in South Carolina, the seller pays it.
Real numbers:
- $150,000 sale → about $555
- $250,000 sale → about $925
- $400,000 sale → about $1,480
It’s not income tax, it’s a transfer fee, and it comes out of your proceeds at the closing table.
5. Living out of state? Expect a withholding
If you’ve moved away and are selling a South Carolina property from another state, the closing attorney is required to withhold 7% of your gain (or 7% of the full sale price if you don’t file the seller’s affidavit showing the gain). Corporations are withheld at 5%.
Important: this is withholding, not an extra tax. It’s a prepayment. When you file your South Carolina return, you reconcile it and often get a chunk back. But it does mean less cash in hand on closing day, so plan for it.
6. Property taxes get prorated
You’ll pay your share of the year’s property taxes up to the day of closing. Greenville County handles this at the closing table — you don’t get a separate bill.
What this looks like in a cash sale
Selling to a cash buyer doesn’t change your tax situation one way or the other. The IRS doesn’t care who wrote the check. What does change is your cost side: no agent commission, no repair credits, no months of carrying costs while the house sits. At Tailwind we cover closing costs and charge no fees, so what we offer is much closer to what you actually walk away with. (More on that in our post on closing costs in a cash sale.)
One honest caveat
We buy houses — we’re not CPAs, and this isn’t tax advice. If your situation involves a rental, a big gain, an estate, or an out-of-state move, spend an hour with a local accountant before you sign anything. It’s cheap insurance.
General information only, not tax or legal advice. Deed recording fee per SCDOR; nonresident withholding per SC Code 12-8-580. Confirm your specifics with a South Carolina attorney or tax professional.
