1031 Exchanges in South Carolina: Rules, Taxes, Insurance, and the Long Arc

A Shop 1031 research page. Reviewed 2026-06-03. Every claim sourced; sources collected at the foot of the page.

South Carolina is a coastal conforming state with explicit Department of Revenue guidance that §1031 exchanges are subject to the deed recording fee, not a §1031-exempt transactional jurisdiction. The distinction matters because the South Carolina Department of Revenue has issued specific guidance confirming that the deed recording fee applies to §1031 transfers absent another exemption category. South Carolina conforms to federal §1031 through S.C. Code Title 12 and taxes recognized boot at graduated rates topping at 6.2 percent following the 2024 reduction.

§1. 1031 mechanics in South Carolina

The federal floor applies under 26 U.S.C. §1031 and 26 C.F.R. §1.1031(k)-1. ^{1 2}

South Carolina conforms to federal §1031 under S.C. Code Title 12, Chapter 6. Recognized boot is taxed at the South Carolina graduated rate topping at 6.2 percent. ³

South Carolina imposes a Deed Recording Fee under S.C. Code §12-24-10 at $1.85 per $500 of consideration ($3.70 per $1,000), with the grantor primarily liable. The South Carolina Department of Revenue has issued explicit guidance (Revenue Ruling 09-13 and related publications) confirming that §1031 exchanges are subject to the deed recording fee absent another statutory exemption. On a $5,000,000 acquisition, the deed recording fee runs $18,500. ^{4 5}

South Carolina imposes a nonresident withholding obligation on real property sales by nonresidents at the maximum individual rate (for individuals, partnerships, trusts, or estates) or 5 percent (for corporations). The §1031 exemption is claimed via Form I-295 (Affidavit Nonresident Seller Withholding), with the seller certifying the §1031 status before closing. ⁶

South Carolina imposes no state-level QI registration regime.

South Carolina is an attorney-state for real estate closings.

§2. Property tax in South Carolina

South Carolina has an effective property tax rate of approximately 0.54 percent of owner-occupied housing value, below the 1.02 percent national median. The structural mechanics are governed by S.C. Code Title 12. Property is classified by use, with significant ratio differential between owner-occupied residential (4 percent assessment ratio) and other residential and commercial property (6 percent ratio), and additional differentials for industrial. The classification differential is among the most pronounced in the country. ⁷

Harlow’s note on unit economics. On a $5,000,000 South Carolina commercial acquisition at the 6 percent assessment ratio applied to the local millage stack, year-one property tax runs roughly $35,000 to $60,000.

§3. Property insurance in South Carolina

South Carolina property insurance is dominated by hurricane and named-storm exposure on the Atlantic coast (Charleston, Beaufort, Hilton Head, Myrtle Beach corridor), severe-thunderstorm and tornado exposure inland, and the post-Hurricane Helene (2024) repricing across the western part of the state. The South Carolina Wind and Hail Underwriting Association (the “Wind Pool”) provides residual-market windstorm coverage for property in designated coastal areas. The South Carolina Department of Insurance regulates carrier conduct. ⁸

Harlow’s note on unit economics. For a $5,000,000 South Carolina inland commercial property, expect property-insurance expense in the range of 0.4 to 0.8 percent of insured value. For Wind Pool coastal property, the range can run 1.0 to 2.0 percent with separate excess flood layered above NFIP cap.

§4. Demographic trends

South Carolina’s population stood at approximately 5.5 million as of 2025 Census estimates, with strong positive net migration concentrated in Charleston, the Myrtle Beach corridor, and the Greenville-Spartanburg upstate. South Carolina ranked among the top five states by absolute population gain in 2025. ^{9 10}

Median household income in South Carolina was approximately $66,000 in 2024, below the national median. ^{11 12}

The major South Carolina markets are Charleston-North Charleston (approximately 850,000 population), Columbia (approximately 850,000), Greenville-Anderson-Greer (approximately 970,000), Myrtle Beach-Conway (approximately 530,000 and the fastest-growing MSA), and the Hilton Head-Bluffton corridor.

§5. Unique legal and financial considerations

The first is the explicit application of the deed recording fee to §1031 transfers, addressed in §1.

The second is the 4 percent vs 6 percent classification ratio differential between owner-occupied residential and other property, addressed in §2.

The third is the Charleston historic preservation overlay.

The fourth is the Wind Pool coastal exposure, addressed in §3.

The fifth is the Myrtle Beach short-term-rental and hospitality market overlay.

§6. Closing summary and the work ahead

The South Carolina 1031 exchanger is operating in a market with a clear set of distinguishing features. The federal floor applies; South Carolina fully conforms at graduated rates topping at 6.2 percent; the deed recording fee applies to §1031 transfers per explicit Department of Revenue guidance; nonresident withholding requires Form I-295 certification; the classification ratio differential places commercial property at 6 percent versus owner-occupied residential at 4 percent; coastal property carries Wind Pool exposure with post-Helene private-market repricing; demographic growth is among the strongest in the country; Charleston, Myrtle Beach, and Greenville are the dominant corridors. The jurisdiction-specific factors above are starting-point context. A state-experienced CRE professional will translate them into deal-specific judgment.

This page is the working map. The actual exchange is run by people. A South Carolina-licensed real estate attorney, a South Carolina-licensed CPA familiar with §1031, a Qualified Intermediary, and a CRE professional who knows this market and these properties. Shop 1031 is the analytics layer that triages which deals deserve your time. The professionals do the work.

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Shop 1031 is an independent analytics platform. We are not a brokerage, a law firm, a tax advisor, a lender, or a Qualified Intermediary. Every 1031 exchange should be reviewed by a state-licensed real estate attorney, a CPA familiar with IRC §1031, and a QI. Brokerage and advisory services, when used, are provided by independently licensed third parties under separate engagement. This page is research, not advice. The South Carolina-specific surfaces discussed (deed recording fee applicability to §1031 transfers per Department of Revenue guidance, Form I-295 nonresident withholding affidavit, 4 percent vs 6 percent classification ratio differential, Wind Pool coastal eligibility, Myrtle Beach STR regulations) each carry material risk if mishandled and should be addressed with a South Carolina-licensed attorney, a South Carolina-licensed CPA, and a Qualified Intermediary before identification, not after.

Federal authority: 26 U.S.C. §1031; 26 C.F.R. §1.1031(k)-1.

South Carolina authority: S.C. Code Title 12 (income tax), §12-24-10 (deed recording fee); SCDOR Revenue Ruling 09-13.

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