Depreciating a Myrtle Beach rental,
from closing day.

The short answer

Depreciation on a rental starts with two numbers. The basis is the price plus the closing costs that count. The land share is the part you cannot depreciate. To find it, open the unit's record on the county assessor's site, read the land and building values, and apply that ratio to your price. A condo record may show a land value for your share of the common elements. If it does not, your CPA sets it from the master deed. The building share is deducted in equal parts over 27.5 years, starting the month the unit is ready to rent. The steps and an example are below.

What goes into the basis?

The basis is the purchase price plus the settlement costs that belong to the property. Costs of the loan do not belong in it. The closing statement lists both kinds on the same page, and that is where first-year mistakes happen.

Both lists come from the rental property rules. A cost of buying the property goes in. A cost of borrowing the money stays out. On a Grand Strand closing, the transfer tax, the title policy and the attorney fee are usually the largest costs that go in.

How do you split the price between land and building?

Land cannot be depreciated, so the price has to be divided first. The rule is a ratio. Each part gets the share of the price that matches its share of the market value on the day you bought. If you do not know the two values, the rules let you use the assessed values on the county tax record instead.

Most owners here use the second method. The Horry County assessor values land and building separately. The record for any parcel shows both numbers. Use the record for the year you bought, not a later year.

There is no typical ratio. An oceanfront lot with a small house and an inland lot with a large house are at opposite ends. The county record settles it for a specific address.

How do you find the land value on the county record?

1. Open the Horry County assessor property record search. Enter the address or the parcel number.
2. Open the record for the year you bought. It lists a land value and a building value on separate lines.
3. Divide the land value by the two values added together. That is the land share.
4. Multiply your purchase price by the land share. That part is land and is never depreciated.
5. Add the closing costs that count to the rest. That is your depreciable basis.
6. Divide it by 27.5. That is the yearly deduction. The first year is prorated by the month the unit was ready.

What if it is a condo?

A condo record may carry a land value for the unit's share of the common elements. If it does, use the same six steps. If the land line is blank, your CPA sets the land share from the master deed. It is the unit's percentage of the common elements times the land value of the whole parcel. Moving the furniture and appliances to shorter schedules is a separate decision, on our cost segregation page.

How do you calculate the yearly deduction?

Round numbers, not a local price. The record shows land $50,000 and building $200,000, so the land share is 20 percent. On a $300,000 purchase, $60,000 is land. The other $240,000, plus $4,000 of closing costs that count, is $244,000. Divided by 27.5, the yearly deduction is about $8,900.

When does depreciation start?

It starts when the unit is placed in service. The rules define that as ready and available for use. A listed, vacant unit is in service. It does not wait for the first tenant.

Residential rental property uses a mid-month convention. The month the unit is placed in service counts as half a month, whatever the day. A unit ready on June 3 and one ready on June 28 get the same first-year deduction, six and a half months. The yearly amount is the building share of the basis divided by 27.5.

Keep three documents. The closing statement. The county record you used for the split. The date the unit was ready. Those are asked for at the sale, years later.

Is it a repair or an improvement?

A repair is deducted in the year you pay it. An improvement is added to the basis and depreciated. The rules require you to capitalize any cost that improves the property. Replacing one broken window is a repair. Replacing every window is an improvement.

Small items have a shortcut. If you elect the de minimis safe harbor for the year, you do not have to capitalize small purchases of tangible property, under the same rules. The dollar limit is in the regulations, not the publication. Confirm the current figure with your CPA. A furnished unit has many small purchases, so the election matters more on a beach condo.

Large furnished purchases go the other way. Furniture, appliances and carpet have shorter recovery periods. Moving them off the 27.5-year schedule is what a cost segregation study does. That is its own decision, on its own page.

What does depreciation do to your sale?

Every dollar of depreciation lowers the basis. The sale price is measured against the lowered basis. Depreciation taken on the building comes back at sale as gain taxed at up to 25 percent. The details, and the South Carolina withholding for out-of-state owners, are on our capital gains page, with a calculator.

One rule matters here because the other pages do not state it. Your basis is reduced by the depreciation you were entitled to take, whether or not you took it, under the depreciation rules. An owner who skipped it for years to keep the return simple still pays recapture as if every year had been claimed. Skipping it loses the deduction and keeps the bill.

A 1031 exchange defers the whole gain, recapture included, into the next property. The steps are on our 1031 exchange page.

What can Chapter3 settle before closing?

Two of the three inputs are property facts. We go through the closing statement with you line by line and mark what belongs to the property and what belongs to the loan. We also pull the county record for the land and building values in the year you bought. Your accountant gets a finished file.

The third input, the in-service date, is yours. Write it down. When the return needs doing, or a repair might be an improvement, we can put you with a CPA who works on Grand Strand rentals.

Common questions

Rental depreciation FAQ for Myrtle Beach owners

Do closing costs count toward the basis of a rental?

Some do. Title fees, recording fees, transfer taxes, title insurance, legal fees and surveys go in. Points, loan origination fees, loan assumption fees, the credit report and a lender-required appraisal stay out. Those are costs of the loan, not the property.

How do I split the price between land and building?

By the ratio of their market values on the day you bought. If you do not know those values, you can use the assessed values on the county tax record. The Horry County record lists land and building separately. For a condo, use the land line on the unit's record if it has one. If not, your CPA sets the share from the master deed.

When does depreciation start?

When the unit is ready and available to rent, not when the first tenant moves in. Residential rental property uses a mid-month convention. The month it is placed in service counts as half a month.

What if I never claimed depreciation?

Your basis is still reduced by the amount you were entitled to claim. At sale the recapture is figured as if you had taken it every year. Skipping it loses the deduction and keeps the bill.

Is a new roof a repair or an improvement?

An improvement. It is added to the basis and depreciated. Patching a leak is a repair, deducted in the year you pay it.

Sources: Publication 527, Residential Rental Property, Publication 946, How to Depreciate Property, Horry County Assessor, Guide to Assessment. Read September 4, 2026. Educational only, not tax advice. The split, the election and the return are for your CPA.

The basis and the split are both set at closing.

Both are property facts we can settle with you before the first tax year.