South Carolina · Code §12-8-580South Carolina nonresident seller withholding: get the gain affidavit signed
A buyer of South Carolina real property from a nonresident seller must withhold (S.C. Code §12-8-580). For a nonresident individual, partnership, trust or estate it is the maximum individual income tax rate applied to the gain when the seller gives an affidavit of the gain – or applied to the whole amount realized when there is no affidavit. Nonresident corporations and other entities: 5%. Withholding never exceeds the net proceeds. Gain excluded under IRC §121 on a principal residence is not a sale for this purpose. The top rate is set in §12-6-510 and is being stepped down toward 6%.
Who withholds, how much and an example
Who withholds
The person who buys the property from a nonresident seller (§12-8-580(A)(1)).
With a gain affidavit
Top individual rate × the gain for individuals, partnerships, trusts and estates; 5% for corporations (A)(1)(a).
Without an affidavit
The same rate applied to the whole amount realized (A)(1)(b).
Cap
Never more than the net proceeds payable to the seller (A)(1)(c).
Example
$500,000 sale, $100,000 gain: with the affidavit the rate applies to $100,000; without it, to $500,000.
No withholding when
- The seller is a South Carolina resident.
- Gain excluded under IRC §121 on a principal residence – only the excess is subject (§12-8-580(B)(2)(b)).
- Tax-exempt or tax-deferred transactions other than installment sales (B)(2)(a).
- Classes of transactions the Department of Revenue exempts (B)(3).
What the TC checks before closing
- Seller's residency and entity type – asked early, not at the closing table.
- The signed exemption certificate or affidavit, in the file before funds are disbursed.
- The withholding line on the seller's settlement statement and who remits it, and by when.
Questions about this withholding
How much is withheld from a nonresident seller in South Carolina?
The top individual rate on the gain with an affidavit, or on the whole amount realized without one; 5% for corporations.
Why does the gain affidavit matter?
Without it the rate applies to the entire amount realized, which can be several times the tax actually owed.
Is a nonresident's former home exempt?
Gain excluded under IRC §121 is not subject; any gain above the exclusion is.
Related guides
Put the residency question and the exemption certificate on the checklist as tasks with an owner and due date in ClosingCode, with the documents attached to the deal.
Start free trialSource: S.C. Code §§12-8-580 and 12-6-510 (scstatehouse.gov, read October 25, 2026).
General information, not legal or tax advice. ClosingCode is software; it is not a law firm or brokerage.