Cost Segregation in South Carolina

Rock-bottom property taxes, full bonus depreciation conformity, and a booming manufacturing economy anchored by BMW, Boeing, and the Port of Charleston make South Carolina one of the most tax-efficient states for real estate investors.

Population
5.45M
Median Home
$280K
Property Tax
0.56%
9th lowest in U.S.
State Income Tax
6.40%
Top Rate
Bonus Depreciation
Full
State Conformity
Avg. Insurance
$2,100
9% below average (inland) / 30-60% above average (coastal)
Tax Strategy

Cost Segregation & Tax Rules in South Carolina

Understanding how federal and South Carolina state tax rules interact is critical to maximizing your cost segregation benefits.

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Median Home Price
$280K
Building Value
78%
of purchase price
Cost Seg Range
25-40%
of building reclassified
Median Home Age
31 yrs
Built ~1993
What Gets Reclassified

A cost segregation study identifies building components that can be depreciated over 5, 7, or 15 years instead of the standard 27.5 or 39 years. In South Carolina, typical reclassification rates are 25-40% of building value.

Common Property Types
Single-Family RanchTownhomesBeach/Vacation HomesSmall Multi-Family
Lower property values in inland markets (Columbia, Greenville) mean lower study costs with strong ROI. Coastal properties (Charleston) command higher values but also higher study fees.
Overline Study Cost & ROI
Overline Study Cost
$499 - $2,000
Avg. ROI
10-40x

The math: A $280K property with 78% building value and 30% reclassification yields ~$24K in Year 1 federal tax savings at the 37% bracket — significantly more ROI than traditional studies costing $5,000-$10,000+.

Housing Stock Advantage

With a median build year of 1993, South Carolina's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

Full Conformity
South Carolina Bonus Depreciation Conformity

South Carolina fully conforms to IRC Section 168(k) bonus depreciation. With a top marginal rate of 6.5% on income over $16,040, SC offers meaningful state-level tax savings on top of federal benefits — especially valuable for investors holding multiple rental properties in Charleston, Columbia, or Greenville.

What This Means for Your Investment: Cost segregation benefits are amplified in SC — you receive accelerated deductions on both your federal AND state tax returns in Year 1. This makes SC one of the most favorable states for cost seg.

Federal vs. SC Depreciation Timeline
PeriodFederal TreatmentSC State Treatment
Year 1100% bonus depreciation100% bonus depreciation (full conformity)
Years 2+Standard MACRS schedulesSame as federal
Section 179 Expensing
State ConformityConforms

SC conforms to federal Section 179 limits. For coastal properties in Charleston or Hilton Head, this enables immediate expensing of hurricane-rated fixtures and equipment that qualify as personal property.

Key Takeaway

A $280K property with a $220K depreciable basis and 30% cost seg reclassification yields ~$24.4K in federal tax savings PLUS ~$4.2K in SC state tax savings in Year 1 — a total of ~$28.6K.

Bottom Line

SC is a full-conformity state. Every dollar of federal bonus depreciation flows through to your SC state return with no addback or modification. This maximizes your total tax benefit from cost segregation.

Eff. Property Tax
0.56%
9th lowest in U.S.
Transfer Tax
Deed recording fee only — no transfer tax
State Income Tax
6.40%
Top Rate
Property Tax Details

Owner-occupied homes are assessed at just 4% of fair market value (vs. 6% for investment properties). Effective investment property rate is closer to 0.84%. Still among the lowest nationally.

Assessment Methodology
MethodMarket value at 6% assessment ratio (non-owner-occupied)
Reassessment CycleEvery 5 years (with 15% reassessment cap)
Assessment BodyCounty Assessor
Appeal WindowWithin 90 days of reassessment notice
Appeal Success Likelihood
Moderate
LowModerateGoodVery High

South Carolina's 15% cap on reassessment increases provides strong investor protection. Non-owner-occupied properties are assessed at 6% of market value (vs. 4% for primary residences), making accurate valuation important. The 90-day appeal window is generous compared to most states.

Work with Overline — Our team helps South Carolina investors identify over-assessed properties and file tax appeals. A successful appeal can save thousands annually and compounds your cost seg savings.

Illustrative Example

Cost Seg Example for South Carolina

This example assumes a purchase eligible for 100% bonus depreciation. All factors below are based on averages from our historical cost segregation studies for SC properties. To see your exact savings, run a property-specific cost seg analysis below.

Typical South Carolina Property Details
$
50%95%
5%35%
2%25%
Total Reclassified30% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$218,400
$280,000 x 78%
Normal Annual Depreciation$7,942
$218,400 ÷ 27.5 yr (residential)
5-Year Reclassified$39,312
15-Year Reclassified$26,208
Total Accelerated$65,520
30% of $218,400 building value
Federal Tax Savings (Year 1)$24,242
$65,520 x 37% bracket
Total Year 1 Tax Savings$24,242
8.3x normal annual deduction captured in Year 1

SC State Tax: SC has full bonus depreciation conformity — your state tax savings also apply in Year 1.

Depreciable Basis

Land vs. Building Value in South Carolina

The land-to-building ratio directly impacts your cost segregation benefit — only the building portion is depreciable. Here is how South Carolina breaks down by region.

Statewide Average
Building (Depreciable)78%
Land (Non-Depreciable)22%
78%
Depreciable Basis
Breakdown by Region
Columbia Metro
82% Building

Affordable land and consistent suburban development. Excellent cost seg ratios.

Greenville-Spartanburg
80% Building

Rapid growth corridor with balanced land/building values.

Charleston (Inland/N. Chas.)
75% Building

North Charleston and suburbs offer better ratios than the historic peninsula.

Charleston (Peninsula/Beach)
62% Building

Historic district and beachfront premium significantly reduces depreciable basis.

Myrtle Beach Coast
70% Building

Tourism-driven land values. Better ratios for inland Myrtle Beach/Conway.

Upstate Rural
88% Building

Lowest land costs in the state. Best cost seg opportunity per dollar invested.

Investor Takeaway

Columbia and Greenville offer the strongest cost seg potential with 80-82% building ratios. Charleston investors should target North Charleston or suburban areas for better depreciable basis. Beachfront properties have the weakest cost seg economics due to high land values.

Insurance & Risk

Insurance Landscape in South Carolina

Insurance costs directly impact your cash flow. Understanding South Carolina's risk profile helps you budget accurately and avoid coverage gaps.

Avg. Annual Premium
$2,100
9% below average (inland) / 30-60% above average (coastal)
National Average
$2,300
for comparison
Premium Trend
Rising 8-12% annually, coastal premiums increasing faster
Primary Risk Drivers
1
Hurricanes & Tropical Storms
Charleston and coastal counties are high-risk. Hurricane Hugo (1989) and recent storms drive underwriting.
2
Flooding
Lowcountry flooding is frequent. Charleston floods regularly during king tides even without storms.
3
Wind & Hail
SC Wind and Hail Underwriting Association provides coverage in coastal areas where private insurers won't.
Coverage Recommendations
Separate wind/hail policy in coastal counties (SCWHUA if needed)
Flood insurance mandatory in many coastal zones, recommended statewide
Named storm deductible (typically 2-5% of dwelling coverage)
Loss of rental income coverage for investment properties
Cost Seg + Insurance Connection

Cost seg studies document individual building components and their values — data that directly supports accurate insurance replacement cost estimates. Investors with a cost seg study on file can better substantiate claims and negotiate premiums.

Market Fundamentals

Economy & Housing Demand in South Carolina

Strong economic engines create stable rental demand. Here is what drives South Carolina's economy and housing market.

State GDP
$290B
Growing 2.8%/year
Unemployment
3.3%
Below national average
Median Income
$60,000
+16.8% over 5 years
Pop. Growth (1Y)
+1.7%
+85,000/year net migration
Major Industries
Manufacturing16%
BMW's largest global plant (Greenville), Boeing 787 assembly (Charleston), Michelin NA HQ, Volvo.
Military & Defense14%
Fort Jackson (Army's largest basic training facility), Shaw AFB, Naval Weapons Station Charleston, Marine Corps facilities.
Tourism & Hospitality12%
Charleston ranked #1 U.S. city by Travel + Leisure. $28B annual tourism industry. Myrtle Beach draws 20M+ visitors/year.
Healthcare11%
MUSC (Charleston), Prisma Health (Greenville/Columbia), largest employers in multiple metros.
Port & Logistics10%
Port of Charleston is the 8th largest U.S. container port, driving warehouse and distribution employment.
Key Economic Engines
BMW + Michelin + Volvo: Greenville-Spartanburg is a global automotive corridor
Boeing 787 Dreamliner: Final assembly in North Charleston, 7,000+ jobs
Fort Jackson: 36,000+ soldiers trained annually, $2.2B local economic impact
Port of Charleston: $63B annual economic impact, growing container volume 8%+ YoY
Housing Demand Signals
5-Year Pop. Growth
+9.1%
Housing Permits YoY
+6.2%
Median Days on Market
38 days
Months of Inventory
2.4
Migration: Lower taxes, warmer climate, and job growth attract retirees and working professionals from the Northeast and Midwest.
Construction: Brick ranch single-story, Wood frame with vinyl/HardiePlank, Raised foundation (coastal), Slab-on-grade (inland)
Landlord & STR Rules
Landlord Friendliness
Very Friendly
Eviction Timeline
30-45 days
Rent Control
Prohibited statewide
STR Regulation
Minimal

SC does not have state-level STR restrictions. Charleston has city-level regulations limiting STRs in some residential zones. Most other areas are permissive.

Local Markets

Top Cities for Investors in South Carolina

Explore city-level cost segregation data, sample deals, and investment fundamentals for each major market in South Carolina.

Charleston, SC
#1 U.S. City (T+L)
Median Home
$465K
Rent (3BR)
$2,400
Property Tax
0.56%
Avg. Insurance
$2,800/yr
Est. Year 1 Tax Savings$48K+
View Charleston Details
Columbia, SC
Triple Anchor
Median Home
$240K
Rent (3BR)
$1,550
Property Tax
0.57%
Avg. Insurance
$1,800/yr
Est. Year 1 Tax Savings$26K+
View Columbia Details
Greenville, SC
"New Austin"
Median Home
$310K
Rent (3BR)
$1,800
Property Tax
0.52%
Avg. Insurance
$1,700/yr
Est. Year 1 Tax Savings$32K+
View Greenville Details
Local Partners

Investor-Friendly Partners in South Carolina

We are building a curated directory of top investor-friendly brokers, property management companies, and service providers in South Carolina.

Investor-Friendly Brokers

Top real estate agents who specialize in investment properties and understand cost segregation, 1031 exchanges, and cash-flow analysis.

Coming Soon
Property Management

Vetted property managers who handle tenant screening, maintenance, and rent collection for both long-term and short-term rentals.

Coming Soon
Insurance Agents

Independent insurance agents who specialize in rental property coverage and can leverage cost seg data for accurate replacement cost estimates.

Coming Soon

Are you a broker, property manager, or insurance agent serving investors in South Carolina?

Partner With Overline
Frequently Asked Questions

Cost Segregation FAQ — South Carolina

Does South Carolina conform to federal bonus depreciation?

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South Carolina fully conforms to IRC Section 168(k) bonus depreciation. With a top marginal rate of 6.5% on income over $16,040, SC offers meaningful state-level tax savings on top of federal benefits — especially valuable for investors holding multiple rental properties in Charleston, Columbia, or Greenville.

What is the property tax rate in South Carolina?

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The effective property tax rate in South Carolina is 0.56%, ranked 9th lowest in U.S. in the U.S. Owner-occupied homes are assessed at just 4% of fair market value (vs. 6% for investment properties). Effective investment property rate is closer to 0.84%. Still among the lowest nationally.

How much can I save with cost segregation in South Carolina?

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A $280K property with a $220K depreciable basis and 30% cost seg reclassification yields ~$24.4K in federal tax savings PLUS ~$4.2K in SC state tax savings in Year 1 — a total of ~$28.6K.

What are the typical cost segregation reclassification rates in South Carolina?

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In South Carolina, typical cost segregation studies reclassify 25-40% of building value into accelerated depreciation categories (5-year, 7-year, and 15-year property). Overline studies cost $499-$2,000 with 10-40x ROI.

What is the average insurance cost for rental properties in South Carolina?

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The average annual homeowner insurance premium in South Carolina is $2,100, which is 9% below average (inland) / 30-60% above average (coastal) the national average of $2,300. Key risk drivers include Hurricanes & Tropical Storms and Flooding.

What is the state income tax rate in South Carolina?

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South Carolina has a state income tax rate of 6.40% (Top Rate). SC is actively reducing rates — the top rate has dropped from 7% to 6.4% and is scheduled to continue declining. First $3,460 of income is tax-free.

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