South Carolina’s Tax Guidelines for Short-Term Rentals

Short-term rentals have become increasingly popular in South Carolina, driven by platforms such as Airbnb and VRBO. However, navigating the tax implications associated with these rentals requires a thorough understanding of state guidelines. This article outlines South Carolina’s tax regulations for short-term rentals, ensuring hosts remain compliant and informed.

Understanding Short-Term Rental Regulations

In South Carolina, a short-term rental is typically defined as a property rented for 29 days or less. As a property owner, you are responsible for complying with local regulations and state tax laws. Before listing your property, check with local government offices to ensure you understand zoning laws, licensing requirements, and occupancy taxes.

Sales and Use Tax

In South Carolina, short-term rental operators must collect and remit sales tax on rental income. The state imposes a 6% sales tax on the rental price. Additionally, municipalities may impose local taxes, raising the total tax rate. It's essential to check with your local government to determine the exact percentages applicable in your area, which can vary significantly.

Accommodations Tax

Besides the sales tax, South Carolina imposes an accommodations tax on short-term rentals. This tax is usually levied at 2% at the state level, and many counties and cities impose additional accommodations taxes. The combined tax can be as high as 15% in some locations. Specifically, accommodations tax applies to nightly, weekly, or monthly rentals, excluding long-term leases lasting 30 days or more.

Tax Registration

Before renting out your property, it’s vital to register with the South Carolina Department of Revenue. You can easily do this online. Upon registration, you will receive a sales tax license number, which you must include on any rental agreements and advertisements.

Filing Taxes

Rental owners must then file tax returns regularly, usually on a quarterly basis, depending on the revenue generated. This includes not only the collected sales and accommodations taxes but also any income tax liabilities from rental proceeds. Accurate record-keeping is crucial to simplify this process. Maintain detailed records of all rental transactions, gross revenue, and the taxes collected.

Impact of Local Laws

Understanding local laws is essential, as cities and counties may have their specific regulations regarding short-term rentals. Some areas, like Charleston and Myrtle Beach, have stricter regulations, including limits on the number of rentals and mandatory permits. Always check local ordinances as they may also impact the business structure, requiring special licensing or insurance.

Conclusion

Complying with South Carolina’s tax guidelines for short-term rentals is vital for owners to avoid penalties and maintain a successful rental business. By understanding sales tax, accommodations tax, registration requirements, and local laws, you can ensure that your venture is both legally compliant and profitable.