Renting Your Charleston Second Home: The 2026 Tax Guide to Deductions, Depreciation, and the Personal Day Rule

Quick answer: If you rent your second home and keep personal use to the greater of 14 days or 10% of the days it is rented at fair rent, the IRS treats it as a rental property (IRS Publication 527). That unlocks every rental deduction: mortgage interest, property tax, insurance, management fees, repairs, utilities, and depreciation. The home itself is depreciated over 27.5 years, and furniture and appliances acquired after January 19, 2025 can be written off 100% in the first year under the 2025 federal tax law (IRS Notice 2026-11). Many owners owe little or no federal tax on their rent as a result. If depreciation creates a paper loss, up to $25,000 a year can offset wages for owners with modified AGI under $100,000, phasing out by $150,000 (IRS Publication 925). South Carolina does not follow federal bonus depreciation (SC Code 12-6-50), so your state return depreciates those items over their normal lives.

Important: we are not CPAs. Proper Stays is a property management company, not a CPA firm, tax advisor, or law firm, and this article is not tax, legal, or accounting advice. It covers the deductions and strategies our homeowners ask about most so you can have a better conversation with your own CPA. Verify everything here with a qualified CPA before you act on it.

Four ways your home pays you back

1. Deduct the costs of owning it. Mortgage interest, property tax, insurance, management fees, repairs, utilities, and more come off the rent the home earns.
2. Depreciation shelters the rent. The building is written off over 27.5 years, and furniture can be written off in full in year one.
3. Losses are never wasted. Up to $25,000 a year can offset wages if your income qualifies. Anything unused carries forward and is released when you sell.
4. Tax-smart exits. A 1031 exchange defers the gain when you trade into another rental, and heirs generally inherit at market value.

The rule that decides everything: count your personal days

The IRS looks at how many days the home is used personally during the year. Personal days include days used by you, your family (even if they pay, unless it is their main home and they pay fair rent), anyone using it under a home swap, and anyone paying below market rent. The line is the greater of 14 days or 10% of the days rented at fair rent. Vacant days count as neither.

Example: a home rented 300 days can be used personally up to 30 days (10% of 300) and still be treated as a rental.

• Within the line: rental property. Every rental expense is deductible, including depreciation, and a tax loss is possible.
• Over the line: a residence that is also rented. Expenses are split by rental vs. personal days, and rental deductions are capped at rental income. Unused deductions carry forward. Some courts allow mortgage interest and property tax to be split over the full year instead, which can raise the rental share (Bolton v. Commissioner, 9th Cir. 1982). Ask your CPA.
• Rented 14 days or fewer: personal home. If you also use it as a home, the rent is tax-free and not reported, but no rental expenses are deductible.

Days that do not count against you: a day spent working substantially full time on repairs and maintenance is not a personal day, even if family comes along. Keep photos and receipts. Plan owner stays early and keep a running count through the year.

Twelve everyday write-offs

When the home qualifies as a rental, the ordinary costs of owning and running it are deducted against its rent on Schedule E. If you also use the home personally, each cost is divided between rental and personal days.

• Mortgage interest: the rental share is deducted on Schedule E, directly against the rent.
• Property taxes: the rental share of your bill. On Schedule E it sits outside the personal SALT cap. (Rentals and second homes in South Carolina are assessed at 6%; see our guide to 4% vs 6% property tax.)
• Insurance: landlord, flood, wind, and liability policies on the home.
• Management fees: your property management fees and any leasing costs are deductible rental expenses.
• Repairs and upkeep: HVAC service, plumbing, paint touch-ups, pest control, landscaping, pool care, pressure washing.
• Cleaning and linens: turnover cleans, linens, towels, and guest supplies.
• Utilities and Wi-Fi: power, water, gas, internet, and streaming you provide for residents.
• HOA dues: regular association dues. Special assessments for improvements are usually added to basis instead.
• Furniture and appliances: 5-year property under IRS rules, eligible for 100% bonus depreciation if acquired after January 19, 2025.
• The home itself: the building (not the land) is depreciated over 27.5 years from the day it is ready and available for rent.
• Professional fees: your CPA, tax preparation for the rental, legal review, and bookkeeping.
• Travel to the home: trips taken mainly to manage or repair the rental. Write down the purpose and dates.

Repairs vs. improvements: work that adds value or extends the life of the home, such as a new roof, a kitchen remodel, or a new HVAC system, is depreciated over time rather than deducted at once (IRS Publication 946).

The bigger levers worth a CPA conversation

100% bonus depreciation. The 2025 federal tax law made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025 (IRS Notice 2026-11). Furniture, appliances, carpeting, and other 5, 7, and 15 year property can be written off in full the year it goes into service, which matters for a fully furnished home. Property acquired before January 20, 2025 follows the older phase-down, which allows 40% for 2025.

Cost segregation study. An engineering study separates the parts of the home that depreciate faster (fixtures, flooring, cabinetry, landscaping, fencing) from the 27.5 year structure. Paired with bonus depreciation, it can move a large share of the home’s cost into the first year. It works best on higher-value homes, so ask your CPA whether the study fee pays off for you.

De minimis safe harbor. With an annual election on your return, items costing $2,500 or less per invoice or item can be expensed right away instead of depreciated. Lamps, small furniture, and kitchen sets usually fall here.

20% qualified business income deduction. Now permanent. Rental income may qualify when the rental operates as a business. The IRS safe harbor (Rev. Proc. 2019-38) calls for 250 or more hours of rental services a year, which can include work done by your property manager, plus separate books and time records. Homes that count as a residence under the personal day rule are not eligible for the safe harbor.

How rental losses get used

Depreciation often creates a tax loss on paper even when the home makes money. Rentals with average stays over 7 days, like our 30+ night furnished homes, are passive activities under IRS rules (Treas. Reg. 1.469-1T), and a passive loss is used in this order:

1. Rental income: the loss first wipes out tax on the home’s own rent.
2. Other passive income: then income from other rentals or passive investments.
3. Up to $25,000 against wages: if you own 10% or more and actively participate (approving tenants, rents, and repairs counts). The allowance phases out between $100,000 and $150,000 of modified AGI.
4. Carry forward: anything left carries forward and is released in full when you sell the home.

Real estate professional status. If you or your spouse spend 750+ hours a year and more than half your working time in real estate, and materially participate in the rental, losses can offset other income without the $25,000 limit. The bar is high, so keep an hours log.

Net investment income tax. Net rental income can carry an extra 3.8% federal tax once modified AGI passes $200,000 (single) or $250,000 (married filing jointly). Depreciation that lowers rental income lowers this tax too.

Plan the exit early

• 1031 exchange: sell and buy a replacement rental while deferring the gain. For homes with some personal use, the IRS safe harbor (Rev. Proc. 2008-16) asks for 14+ fair rent days and personal use within the 14 day / 10% line in each of the two years before and after the exchange.
• Depreciation recapture: depreciation you took (or could have taken) is taxed when you sell, up to 25% on the building and at ordinary rates on furniture and other personal property.
• Home sale exclusion: the $250,000 / $500,000 exclusion generally applies only to a home you lived in as your main home for 2 of the last 5 years, so most second homes do not qualify. Plan any move-in with your CPA first.
• Step-up in basis: a home passed to heirs generally resets to market value at death, which can erase the deferred gain and the recapture.

South Carolina notes

• Property tax at 6%: a second home is assessed at 6% whether or not it is rented (SC Code 12-43-220) and does not get the 4% primary home rate. Once it is a rental, that bill becomes a deductible rental expense.
• Accommodations tax: stays shorter than 90 continuous days carry South Carolina’s 7% sales tax on accommodations plus local taxes, charged to the guest on top of rent. Stays of 90 or more continuous days are exempt (SCDOR).
• Business license: the City of Charleston, Mount Pleasant, and other towns each set their own rental license rules. Confirm yours renews on time.
• Your state return: South Carolina does not adopt federal bonus depreciation (SC Code 12-6-50), so your CPA keeps a separate state depreciation schedule. As of SC DOR Information Letter #26-4 (January 2026), the state had also not adopted the 2025 federal tax law changes, and the Senate declined the conformity bill (H. 3368) in March 2026, so your CPA may need state adjustments.

Year-end checklist: bring this to your CPA

• Monthly owner statements from your owner portal
• Mortgage interest statement (Form 1098)
• Property tax bill and insurance declarations
• Receipts for furniture, appliances, and improvements, with dates placed in service
• Closing statement from your purchase, for basis and land value
• Your count of personal use days, and any repair-only visits
• Travel log for trips taken to manage the home
• HOA statements and any special assessments
• Prior year federal and state depreciation schedules and any carried-forward losses
• Hours log, if you plan to claim real estate professional status or the QBI safe harbor

How Proper Stays helps

Proper Stays manages furnished Charleston homes on 30+ night terms for relocating professionals, corporate teams, medical staff, and film crews. We keep every rent payment, fee, repair, and invoice organized in your monthly owner statements, so year-end is a download, not a scavenger hunt. Your CPA handles the tax strategy; we make sure they have clean records to work from. We also schedule owner stays with you in advance so your personal days stay where you and your CPA want them.

Frequently asked questions

How many days can I use my second home and still deduct it as a rental?
The greater of 14 days or 10% of the days it is rented at fair rent. A home rented 300 days can be used personally up to 30 days. Days spent working full time on repairs do not count as personal days (IRS Publication 527).

Can I write off furniture in a furnished rental in one year?
Under federal law, yes for qualifying furniture and appliances acquired after January 19, 2025, through 100% bonus depreciation (IRS Notice 2026-11). South Carolina does not follow bonus depreciation, so the state return spreads those costs over their normal lives.

Can rental losses from my second home offset my salary?
Up to $25,000 a year if you own at least 10%, actively participate, and have modified AGI under $100,000. The allowance phases out by $150,000. Unused losses carry forward and are released when you sell (IRS Publication 925).

Are property management fees tax deductible?
Yes. Management fees and leasing costs are ordinary rental expenses deducted on Schedule E.

Does the $250,000 home sale exclusion apply to a second home?
Generally no. It applies to a home you lived in as your main home for at least 2 of the 5 years before the sale. A 1031 exchange is the more common way to defer gain on a rental.

Is a second home in South Carolina taxed at 4% or 6%?
6%, whether or not it is rented (SC Code 12-43-220). The 4% ratio is only for your legal residence.

*Disclosure: Proper Stays is not a CPA firm and our team are not CPAs, tax advisors, or attorneys. This guide is general information for homeowners, not tax, legal, or accounting advice, and you should verify every point with your own CPA before acting on it. Tax rules change and every situation is different, so review your plans with a qualified CPA, ideally one who works with South Carolina rental owners. Reflects federal and South Carolina law as checked in October 2026. Sources: IRS Publications 527, 925, and 946; IRS Notice 2026-11; Rev. Proc. 2008-16; Rev. Proc. 2019-38; Treas. Reg. 1.469-1T; Bolton v. Commissioner (9th Cir. 1982); IRS Net Investment Income Tax guidance; SC Code 12-43-220 and 12-6-50; SC DOR Information Letter #26-4; SC DOR Accommodations manual.*

Thinking about renting your Charleston second home furnished on 30+ night terms? Book a consult with our team at owner.properstays.com, call (843) 640-0897, or email Team@ProperStays.com.