I sold my SC house while resident in MD. SC withheld 7% of the gains, sale was 9 months after purchase. I don't think it is taxable - where do I capture in TurboTax?

[robert2929]

We sold our SC home since I got a new job. We were living in MD when we closed on the SC home, so SC withheld 7% on the estimated gains. For federal, we can get a partial exclusion of the gain, something like 38% of $250,000 (for me and my wife), which is much higher than our gains. It seems SC should refund us the 7% of the raw capital gains since we paid no tax on the gains in Federal. I only have my closing disclosure to prove we paid this tax to SC. Where/how do I report/capture this within TurboTax?

[ColeenD3 · Accepted solution]

South Carolina does not comply with Federal law.

South Carolina Capital Gains

If you are selling your home in South Carolina or considering buying an investment property here, you should know that South Carolina does, indeed, have a capital gains tax, too.

South Carolina levies a 7% long-term capital gains tax. There is no exemption for primary residences, so any property you sell will cost you 7% on any difference between the price you paid and your selling price. 

SC CG

[robert2929]

Thanks, that was very helpful. One more question though, how does SC calculate capital gains on a home sale? For example, does it consider the cost-basis of the bought and sold homes, or simply the difference between the bought and sold price? If the former, how do I indicate I overpaid the capital gains tax to SC?

[ColeenD3]

Selling expenses. Selling expenses include real estate commissions, advertising fees, legal fees, deed recording fees, and termite or heat/air letter fees.

Amount realized. The amount realized on the sale is the selling price less selling expenses. The term is defined in Internal Revenue Code §1001(b) as adopted for South Carolina income tax purposes.

Gain. Gain is computed as provided in Internal Revenue Code §1001(a) as adopted for South Carolina income tax purposes. Gain is the amount required to be included in the seller’s South Carolina gross income. If the amount realized is more than the adjusted basis, the difference is a gain. If the amount realized is less than the adjusted basis, the difference is a loss.

SC DPOR