What to Know About South Carolina Real Estate Taxes Before Selling
People sell their homes for a variety of different reasons. Some are looking to downsize because their current home is too large for their needs. Others might need a bigger place to accommodate a growing family. Some want to move to a different part of the state, while others want to move several states away.
If you own your home, you’ve got a lot to consider other than finding a new place to live. You also need to sell your current property. There’s more to selling than putting your house on the market. You also have to consider the cost of selling, including any real estate taxes you may be responsible for paying.
South Carolina Real Estate Taxes
Selling a home in any state comes with a few costs. Understanding how much it costs to sell your home in South Carolina can help to make it easier to plan for purchasing your next property. While you might not know the exact figure before selling, you can get a rough estimate, which helps to simplify the process of planning for your next home.
One of the biggest factors that many homeowners forget is real estate taxes. Let’s take a closer look at the different taxes you might have to pay when selling your South Carolina home.
Like many other states across the country, South Carolina has an income tax that applies to any profits you obtain from the sale of real estate. The state charges 7% on your capital gains.
So, how do you calculate your capital gain? You subtract your cost basis from your sale price. Your cost basis is what you put into the home: the purchase price, closing costs, and structural improvements you made to sell the home. The figure is how much you made from the sale.
When you sell your property, state and local governments often charge what’s called a transfer tax. The transfer tax is a percentage of the appraised value of the property or the sale price. In South Carolina, you have a combined state and local transfer tax of 0.37% on the sale price (or $1.85 for every $500). Typically the seller (you) covers the cost, but you may choose to negotiate it as a part of the sale agreement.
As a homeowner in South Carolina, you pay property taxes each year (if you have a mortgage, your lender does this through an escrow account). You may still owe a prorated amount depending on when you sell the house. If you recently paid property tax, you may owe a small amount. If it’s coming time to pay your taxes, however, you’ll likely owe more.
Other Factors That Influence the Cost of Selling Your Home
While real estate taxes might be some of the biggest factors in determining the cost of selling your home, there are a few others to keep in mind as well:
Your Mortgage Balance
If you have a mortgage, you’ll have to pay the remaining balance to your lender upon the sale of your house. Depending on your lender, you may have other fees that come with paying off your mortgage as well, such as a recording fee or reconveyance fee.
You have to provide a buyer with a disclosure that details the condition of your home. The buyer may request that you fix certain issues before you can close the deal. For instance, they might ask that you replace the roof or repair damage from a termite infestation.
If you live in an area with a Homeowner’s Association, you may have to pay a prorated HOA fee as well as an HOA transfer fee. These costs are negotiable between you and the buyer.
During the sale of your home, an escrow account handles all money involved in the transaction. In the state of South Carolina, the buyer and the seller split the escrow fee down the middle. Your fee depends on the sale price of the house and the escrow account’s base fee.
Typically, the seller pays for title fees. These fees cover title insurance, which protects the buyer in case there’s a problem with the title to the house. It essentially guarantees the buyer that there are no loans, liens, or judgments against the title.
Your Agent’s Commission
A real estate agent is an invaluable asset for selling a house, no matter where you live. You pay them a commission, which is a percentage of the sale price of the house. The cost is general 5% to 6% of what you receive.
Am I Eligible for Any Tax Deductions?
There are a few real estate tax deductions that you might be eligible to receive. It depends on your situation. Here are a few deductions you might qualify for:
Federal Capital Gains
You may not have to pay any federal capital gains taxes on the sale of your property if you meet the following criteria:
- Your capital gains are less than $250,000 if you’re single or less than $500,000 if you’re married
- You owned the home and lived in it for more than two years
- You didn’t exclude the profits from the sale of another property during those two years
State Capital Gains
South Carolina has a capital gains tax of 7%. The state also has a 44% exclusion from capital gains on a 1040 federal form. As such, the tax rate dips down to 3.92%.
If you make improvements or repairs on the home within 90 days of selling it, you may be eligible to deduct those costs from your taxes.
You may also be eligible to deduct other costs related to the sale of your house from your taxes, such as the mortgage interest for the time you owned the house, discount points, and property taxes up to $10,000.
Understanding the Cost of Selling Your Home
Selling a home involves more than listing your house on the market and completing a transaction. As the seller, you do have real estate taxes and other costs to consider. While it can be a lot to take in, getting a general idea of how much you’ll be responsible for can help you to plan for your future more accurately.
Tom BurchnellProduct Marketing Director
Tom Burchnell, Director of Digital Product Marketing for EasyKnock, holds an MBA & BBA in Marketing from University of Georgia and has 6 years of experience in real estate and finance. In his previous work, he spent time working with one of the largest direct lenders in the SouthEast.