Selling Real Estate Out of State

It’s hard enough putting real estate on the market, let alone in another state. Selling real estate out of state can be profitable, especially in areas with a flourishing housing market. Whether you need to sell just one property or it’s something you might be doing often, it’s important to understand that real estate laws can be different from one state to another.

Hire a Real Estate Lawyer Who Knows State Real Estate Laws

Mack & Mack Attorneys can provide the legal advice you need to sell out-of-state property. Our legal team is well-versed not only in South Carolina real estate laws but also in those of other states. We can provide the resources and legal guidance you need to make smooth real estate transactions in other states. With over 85 years of experience spanning four generations of lawyers, our practice has a great understanding of real estate law.

Selling Real Estate Out of State

The US home vacancy rate was as low as 1% in 2024. As a result, many South Carolina residents who own property in other states are deciding to take advantage of housing markets that are lucrative for sellers. To optimize profits, property owners must understand the laws and tax implications that can affect profit margins for cross-state transactions. Thus, obtaining the advice of a real estate lawyer is imperative for conscientious sellers.

Capital Gains Tax Deduction in South Carolina

One of the biggest issues for selling property is capital gains taxes. Even though the property you’re selling is located outside of South Carolina, you are still subject to regulations and tax liabilities for both states. An advantage for South Carolinians when selling real estate outside of South Carolina is the 44% capital gains deduction allowance on their state tax return.

Like-Kind Exchange

You may be able to avoid getting double-taxed, though, if you hire a real estate lawyer to review the circumstances of the sale ahead of the sale. For example, if you’re planning to reinvest the revenue from your sold property into a similar property with a price equal to or higher than what you sold for, there may be the possibility of deferring capital gains.

Another option is to restructure your proceeds so they are paid to you over time. This spreads out the taxation liability.

Why It’s Important to Have a Lawyer

Having a strong understanding of real estate laws in South Carolina is an important aspect for any good lawyer. It’s just as important, though, that a real estate attorney be able to offer advice on the real estate laws of other states in regard to the sale of out-of-state real estate. Specific ways in which a real estate attorney can help with an out-of-state property sale are listed below:

• Reviewing closing compliance for both states
• Assisting in filling out necessary forms for tax obligations
• Providing invaluable advice on minimizing capital gains taxation, such as determining eligibility for exclusions, installment sales, or exchanges
• Reducing the risk of IRS and state tax issues, which is especially important with cross-state real estate transactions

Why Choose Us?

If you’re looking for a reputable real estate attorney who has extensive experience with real estate law cases involving selling real estate out of state, Mack & Mack Attorneys has what you need. Our attorneys are highly skilled and capable of handling any legal matter that you may have now, or that might come up in the future. We have a reputation for handling matters efficiently and accurately in South Carolina and many other states.

FAQs

​Q: Can You Sell Real Estate Out of State?

A: Yes, you can sell real estate out of state. You should, however, do your due diligence and be prepared to meet the requirements of the real estate laws of both states. This includes understanding the potential tax obligations of both your state of residence and the state where the property you are selling is located. For example, inquiring about capital gains taxes in the other state and the requirement to file a nonresident tax form to report the sale.

Q: ​What Is the 3-3-3 Rule in Real Estate?

A: In real estate, the 3-3-3 rule is a general rule of thumb for valuing property. It involves reviewing the past three years of real estate pricing trends in the area where the property is located. Next, the rule encourages buyers to consider potential infrastructure projects in that area over the next three years.

This includes road expansions, new neighborhoods, or retail developments. Finally, look at three other similar properties in the area to compare pricing and value.

Q: ​How Can You Avoid Capital Gains Tax on Property Sold Out of State?​

A: To avoid capital gains tax on property sold out of state, you can live at the property for two years before you sell, but this isn’t always feasible. You could also purchase a similar property at the same cost or more to exclude the sale from capital gains, which is called a like-kind exchange. There are other ways to offset capital gains, for instance, with capital losses. A real estate lawyer can offer advice that applies to your specific situation.

Q: What Is the 20% Rule in Real Estate?

A: In real estate, the 20% rule refers to the 20% pass-through tax benefit. For owners of rental property, claiming a pass-through rental business rather than an investment can reduce the amount of rental income that is taxable. Those property owners who qualify for this deduction only pay taxes on 80% of their annual rental income.

Connect With a Seasoned South Carolina Real Estate Law Firm

Mack & Mack Attorneys have helped countless real estate investors to sell real estate out of state and can help you as well. We have an arsenal of resources and a knowledge base built over eight decades. Contact our office to schedule an appointment to discuss your situation with a real estate attorney who is familiar with real estate laws in both South Carolina and the state where the property you wish to sell is located.