1031 exchange
in South Carolina.

The basics

What a 1031 exchange is

A 1031 exchange means you sell one rental, buy another, and put off the tax bill on your profit. The tax is delayed, not erased, and the deadlines are strict. Call us before you list, and we line up the sale, the next property, and the loan. That sequence is routine for our agents here, because 1031 buyers are one of the largest groups of investors Chapter3 works with on the Grand Strand.

The paperwork uses fancy names for plain things. The relinquished property is just the property you sell. The replacement property is the property you buy. A qualified intermediary, a neutral company that holds your money between the two sales, stands in the middle. You never touch the cash. The boxes below sum up the trade.

1031 replacement buyers are one of the largest groups of investors we work with. The usual shape: sell in an expensive market, buy on the Grand Strand, where the same money buys more property and the rents hold up.

One client, based in New York and buying with Tim for years, owns more than 200 rental properties, most of them condo units here. When a property has used up its depreciation, he sells it and trades the money up into a larger property through a 1031 exchange. The bigger purchase adds new depreciable value on top of what carried over, and the tax on the sale stays deferred. Residential rental buildings depreciate over 27.5 years, so a long-held rental eventually stops sheltering its own income. That is the point where many investors exchange instead of hold. How depreciation recapture builds up, and what a study does to the size of it, is on our cost segregation page.

The deadlines

The exchange step by step, and what we do at each one

Both clocks start the day your sale closes, and they run at the same time. Day 45 to name the next property, day 180 to own it. The work happens in this order.

1. 1

   Before you list. Pick a qualified intermediary, the neutral company that will hold your money, and tell your closing attorney an exchange is coming. Our agents start the replacement search now rather than after the sale, because the 45 days are the tight part.

2. 2

   Your sale closes. The clock starts. The money goes straight to the intermediary. Touch it yourself and the exchange is over. We work the closing with your attorney to keep that clean.

3. 3

   Days 1 to 45. Shop with the numbers. Your replacement is an investment, so we judge candidates on rent, cap rate and tenant history, not on the finishes. We search the Coastal Carolinas MLS and our off-market sources and bring you a short list, usually two or three strong picks and a backup.

4. 4

   Day 45. Name what you might buy, in writing. The list has to be signed by you and delivered to the intermediary. Telling your own agent, attorney or accountant does not count. We draft the list with you and send it in time.

5. 5

   The loan runs alongside all of this. Most exchanges need financing, and that loan has to close inside the same 180 days. We bring the lender in during the search so the two move together.

6. 6

   Day 180. You close, and the tax stays deferred. The purchase has to be finished by then. Our closing attorney, your intermediary and the lender all work to the same date, and we handle the South Carolina withholding paperwork covered further down.

How the day 45 list works. You choose one of three ways to write it. Name up to three properties at any price, which is what nearly everyone does. Name more than three, as long as the whole list adds up to no more than twice what you sold for. Or name as many as you like, if you end up buying at least 95 percent of what you listed. The practical job is to have three properties you would be happy to own by day 45, and bringing you those three is our part.

Two things that end exchanges. The window can be shorter than 180 days, because the exchange must be finished by the due date of your tax return for the year of the sale, extensions included. A late-year seller may need to file a tax extension to keep the full window. The dates themselves never move. The IRS extends them only for presidentially declared disasters.

Our closing attorneys, insurers and lending partner have all worked to these two dates with Chapter3 before. An exchange that is a scramble for a brokerage doing its first one is routine for our team on the Grand Strand. Run candidates through the long-term rental analyzer while you shop, so day 45 names a property you already trust.

Financing

The replacement loan must close inside the 180 days too

To put off the whole tax bill, the property you buy usually has to cost as much or more. Most exchanges need a loan for that, and the loan must close inside the 180 days. We can bring a lender in early, so the search and the loan move together.

Many exchange buyers use a DSCR loan, where the loan qualifies on the property's rent, not your tax returns. A 1031 is a tax move, so confirm your plan with a qualified intermediary and a tax advisor.

The standard kind

The delayed 1031 exchange

When investors say 1031 exchange, they almost always mean a delayed exchange. You close the sale first, the qualified intermediary takes the money, and then you buy the replacement inside the two windows: 45 days to name it, 180 days to close it. Everything on this page applies to that structure.

Our broker-in-charge, Tim Nash, has sold on the Grand Strand for more than 30 years and has worked 1031 exchanges for investors here, and his advice is always the same: build the replacement shortlist before the sale closes. The 45 days move faster than anyone expects, and the exchanges that get in trouble are usually the ones that started shopping on day one instead of a month before listing.

Buying first

The reverse 1031 exchange

A reverse exchange flips the order: you buy the replacement first, then sell the old property within 180 days. The rules do not let you hold title to both at once, so a company created by your qualified intermediary, called an exchange accommodation titleholder, parks the title on one property while your sale closes.

Reverse exchanges cost more in intermediary fees, and financing is harder because the loan closes while title sits with the parking company. Fewer lenders will do that, and the ones that will want more lead time. A reverse makes sense when the right property shows up before your sale is ready. If that is your situation, call your intermediary and us earlier than feels necessary. If you want the deferral without managing anything again, the hands-off alternative is a DST.

Finding the replacement

1031 exchange properties for sale in Myrtle Beach

Speed is the reason the team matters, and it is the reason 1031 investors on the Grand Strand end up at Chapter3. Our agents, our lending partner, our insurance contacts and the closing attorneys we work with all work to the exchange deadlines, so the identification and the closing land inside the windows. Most brokerages train their agents to find a like-kind property by the floors and the counters. Ours are trained to find it by the cap rate and the tenant history, because a replacement property is an investment, and on the Grand Strand the unit that photographs best is not always the one that pays best.

Tell us what you are trying to do: the price range from your sale, whether you want long-term tenants or short-term rental income, and the towns you like. We search the Coastal Carolinas MLS and our off-market sources, run the numbers on every candidate, and bring you the best investment properties for your needs, usually two or three strong picks and a backup, sized to the identification rules.

You can also hunt on your own. Our free investment analyzer covers the whole city: run any address, see the rent, the costs, and the projected return, then send us your shortlist. Either way, you reach day 45 with a list you already trust.

South Carolina detail

Selling from out of state: South Carolina withholding

When a nonresident sells South Carolina real estate, the state normally keeps back part of the money at closing. It is called nonresident withholding. In a properly structured 1031 exchange, the seller completes a state affidavit so the withholding matches the tax due, which on a fully deferred exchange is often nothing. The current withholding rate, forms, and refund mechanics are on our capital gains page.

The closing attorney and your qualified intermediary prepare that form as part of the closing. The exact rules and percentages change, so Chapter3 confirms the current requirement with the closing attorney on every exchange we handle here. The official source is the South Carolina Department of Revenue.

Let us help with your next investment.

Send us an address you are looking at, or have us send you an investment property for sale. We will run the rent, the expenses and the association documents before you write an offer, at no cost.

Common questions

Frequently asked questions

Sources: IRS, Like-Kind Exchanges Under IRC Section 1031, IRS Form 8824 instructions, IRS Publication 527 on depreciation, South Carolina Department of Revenue. We are not tax advisers; confirm your exchange with a qualified intermediary and a tax professional.