Inherited Property in South Carolina and in process of closing. Attorney says have to pay 7% Capital Gains State Tax at time of sale unless we file Deemed Resident South Carolina Income Tax Return. Given property inherited do we have to pay state sales tax? If not, what Code gets us out of this tax? If we file Deemed Resident are we only postponing the tax?

asked 13 Nov '10, 17:11

Jenni's gravatar image

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edited 13 Nov '10, 20:17

Bill-EA's gravatar image


I'm not familiar with the Deemed Resident Form you're speaking of. NC does have a form that can be attached to a business return for a nonresident where the nonresident promises to file a nonresident return and pay any associated tax, but I don't think that's what you're talking about.

You will be required to file a NC return. Whether any tax is due will be based on your basis in the property and the sale price and closing costs.

The hitch here is that most states are now tightening up on collecting a nonresident withholding on the sale of property by nonresidents because they know how hard it is to get a nonresident to file a return and pay tax once the money has left the state.

The good news is that whatever NC takes as a deposit at closing will be credited to you when you file a NC nonresident return, so you'll get back any overage.


answered 29 Nov '10, 20:19

EAgent's gravatar image

accept rate: 6%

Many states, including South Carolina, have a requirement to withhold tax when a non-resident of the state sells property. So it is not capital gains tax that is being paid at the time of sale. It is just a withholding to help motivate you to file a tax return. If the property was inherited and there was no actual gain on the sale of the property, then all of the tax withheld will be refunded when you file your state tax return. There is no exemption available in your case.


answered 10 Dec '10, 20:09

Bill-EA's gravatar image

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Asked: 13 Nov '10, 17:11

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Last updated: 23 Jul '11, 08:22