Operating a short-term rental in South Carolina comes with tax obligations that differ from traditional long-term rental. Understanding these requirements upfront prevents surprises at tax time and ensures you stay compliant.
State Sales Tax
South Carolina imposes a 5% state sales tax on accommodations, including short-term rentals. This applies to the rental of any accommodation for fewer than 90 continuous days. The tax is calculated on the total rental charge, including the nightly rate and any mandatory fees (like cleaning fees).
State Accommodations Tax
In addition to the sales tax, South Carolina charges a 2% state accommodations tax on gross proceeds from rentals of accommodations. This brings the combined state-level tax to 7% of gross rental revenue.
Local Accommodations Tax
Sumter County and the City of Sumter may impose additional local accommodations taxes, typically in the range of 2-3%. The exact rate depends on whether your property is within city limits or in unincorporated Sumter County. Check with the Sumter County Treasurer's office for the current local rate applicable to your property's location.
Total Tax Burden
Combined, property owners can expect total taxes of approximately 9-10% of gross rental revenue. This is collected from guests (added to their booking total) and remitted to the appropriate tax authorities.
Platform Tax Collection
Here's the good news: Airbnb and VRBO automatically collect and remit most applicable taxes in South Carolina. When a guest books through these platforms, the taxes are calculated, added to the guest's total, collected at the time of booking, and remitted directly to the state and local authorities by the platform.
However, you should verify that all applicable taxes are being collected correctly, especially the local accommodations tax. Some platforms may not collect every local tax, leaving the host responsible for remitting the difference.
SC Retail License
To legally collect accommodations taxes, you need a Retail License from the South Carolina Department of Revenue. Registration is free and can be completed online at dor.sc.gov. This license authorizes you to collect and remit sales and accommodations taxes. Even if Airbnb is collecting taxes on your behalf, having this license ensures you're properly registered with the state.
Income Tax Implications
Short-term rental income is reported on your federal and state income tax returns. The income is generally reported on Schedule E (Supplemental Income and Loss) or Schedule C (if you provide substantial services to guests). Deductible expenses include mortgage interest, property taxes, insurance, utilities, cleaning costs, platform fees, management fees, repairs, depreciation, and supplies.
If your property is used both personally and as a rental, the tax treatment becomes more complex. Days of personal use affect which expenses are deductible and how. Consult with a tax professional familiar with short-term rental to ensure you're maximizing your deductions while staying compliant.
Quarterly Filing
If you're collecting taxes that aren't handled by the booking platforms, you'll need to file and remit those taxes quarterly with the SC Department of Revenue. Keep detailed records of all rental income, tax collections, and remittances.
Professional Help Is Worth It
Short-term rental tax treatment has nuances that general tax preparation may miss. Consider working with a CPA or tax professional who has specific experience with short-term rental properties. The cost of professional tax preparation is itself a deductible business expense and often pays for itself through properly claimed deductions.
