South Carolina taxes capital gains as ordinary income — up to 6% — stacked on top of federal tax, so selling appreciated real estate can cost roughly ~29.8% of the gain. A 1031 exchange into a Delaware Statutory Trust lets South Carolina investors defer that combined bill and trade active landlording for passive institutional real estate.
The South Carolina tax math
Here's the tax stack on a long-held rental sold for a $1.5M gain (excludes depreciation recapture, taxed separately at up to 25%):
| On a $1.5M gain | Tax |
|---|---|
| Federal long-term capital gains (20%) | $300,000 |
| Net investment income tax (3.8%) | $57,000 |
| South Carolina income tax (6%) | $90,000 |
| Total if you simply sell | $447,000 |
| Tax if you 1031 into a DST | $0 deferred |
In South Carolina's top bracket, roughly the combined rate above goes to tax if you sell outright — versus $0 now with a qualifying 1031 exchange. Run your South Carolina numbers →
South Carolina 1031 rules
Rules summarized as of 2026 — verify with your tax advisor.
Conforms to federal §1031
South Carolina conforms to IRC §1031, so a qualifying exchange defers South Carolina tax as well as federal tax. South Carolina deducts 44% of net long-term capital gains, cutting the effective top rate to about 3.36%.
Withholding at sale
South Carolina may require nonresident withholding at closing; a qualifying 1031 exchange generally defers it. Confirm specifics with your closing agent.
How gains are taxed
Taxed as ordinary income — up to 6%. South Carolina deducts 44% of net long-term capital gains, cutting the effective top rate to about 3.36%.
South Carolina market snapshot
Illustrative — wire to a market-data feed; refreshed quarterly.
Baker 1031 in South Carolina
Realized (acquired, held, sold) programs on South Carolina assets. Joined from full-cycle-deals.csv; sponsor-reported, net-to-investor, not independently verified; past performance ≠ future results.
| Program | Sponsor | Avg annual | Equity × | Hold |
|---|---|---|---|---|
| Aaron's Inc. – Charleston, SC — Charleston | Four Springs | 7.01% | 1.18x | 2.56 yr |
| Aaron's Inc. – Anderson, SC — Anderson | Four Springs | 7.20% | 1.17x | 2.41 yr |
| Crowne Plaza – North Charleston, SC — N. Charleston | Peachtree Group | 26.90% | 1.92x | 2.92 yr |
| Abbeville — Abbeville | Time Equities | 10.41% | 1.43x | 4.68 yr |
| Broad River Trace — Columbia | Passco | 7.27% | 1.63x | 7 yr |
| Vinings at Laurel Creek — Greenville | Passco | 10.15% | 1.97x | 7 yr |
| 1000 West — Charleston | Passco | 16.64% | 2.16x | 5 yr |
| Lively at Carolina Forest — Myrtle Beach | Passco | 20.97% | 2.14x | 4 yr |
See every South Carolina deal in the Data Center →
Current offerings for South Carolina investors
| Offering | Sponsor | Type | Status |
|---|---|---|---|
| ExchangeRight Net-Leased All-Cash 20 DST | ExchangeRight | Net Lease | Limited Availability |
| FSX Industrial 34, DST | Four Springs Capital | Industrial | Available |
| ExchangeRight Essential Income 9 DST | ExchangeRight | Net Lease | Closed |
DST sponsors based in South Carolina
Learn more
South Carolina FAQ
What is the capital gains tax rate in South Carolina?
South Carolina taxes capital gains as ordinary income, up to 6%, with no separate long-term rate. Combined with the federal 20% rate and the 3.8% net investment income tax, a high-bracket South Carolina seller can face roughly ~29.8% on a real estate gain. South Carolina deducts 44% of net long-term capital gains, cutting the effective top rate to about 3.36%.
Does South Carolina recognize 1031 exchanges?
Yes. South Carolina conforms to IRC §1031, so a properly structured exchange defers South Carolina tax as well as federal tax.
Why use a 1031 exchange in South Carolina?
To defer the tax on a large gain (up to about ~29.8% combined) and move from active landlording into passive, professionally managed real estate while keeping your full equity invested. These are Regulation D offerings for accredited investors.
Disclosures
This page is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. State tax and 1031 rules summarized here are general, current as of 2026, and not tax advice — verify with your CPA and attorney. For accredited investors only. Representatives may transact business only in states where registered or exempt. Securities offered through Aurora Securities, Inc., member FINRA/SIPC; Baker 1031 Investments, LLC is independent of Aurora. Performance shown is sponsor-reported, realized programs only, net of fees, not independently verified, and not indicative of future results.