USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton, Parker Havis and Aaron Lay, K&L Gates
1. General 1.1 Main Sources of Law
equity investors and equity fund lenders are becoming a significant source of funding for South Carolina real estate acquisition and development. 1.3 Proposals for Reform Proposed limitations to the 1031 like-kind exchange rules have been included in prior federal budget pro - posals but were not enacted. Although proposals to limit the amount of gain eligible for deferral have resurfaced in federal budget discussions, no such limitations have been adopted as of early 2026. The Trump administration has expressed support for preserving the tax deferrals that the 1031 like-kind exchanges provide, suggesting that limitations will not be imposed, but it can be expected that 1031 like-kind exchanges will continue to be perceived as a “loop - hole” by Congress. South Carolina has steadily reduced its top marginal income tax rate from 6.2% to 6.0% for tax year 2025. Like other states in the Southeast, these lower state income taxes are expected to continue to attract retirees and remote workers from higher income tax states. Real estate investors have been longing for a reduc - tion in interest rates (or at a minimum, more certainty with respect to anticipated rate cuts), which could propel the growth of the real estate sector. In the January 2026 Federal Reserve meeting, the Federal Reserve left key interest rates unchanged in the range of 3.5% to 3.75%, signalling a pause in its recent rate- cutting trend. The Corporate Transparency Act, which imposed reporting requirements aimed at combating money laundering, tax fraud and similar financial crimes, went into effect in 2024, but enforcement has been the subject of ongoing litigation and regulatory guid - ance. The Treasury Department has maintained its position that it will not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, and it will further not enforce any penalties or fines against US citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect. Pursuant to an Interim Final Rule published on 26 March 2025, the Treasury Depart -
Real estate law is established by federal statutes, state statutes and common law. General principles of contract and property law govern real estate transfers and ownership, and formalities related to such matters can vary by state and locality. 1.2 Main Market Trends and Deals The industrial/logistics asset class has remained strong, and the uptick is expected to continue in acquisitions and assemblages of real property for industrial uses, much of which is related to the bur - geoning automotive manufacturing and aerospace industry in South Carolina. Construction, purchase and sale activity related to multi-family projects has moderated but remains active, and there continues to be great interest in the acquisition of South Carolina real estate by out- of-state institutional investors. As a result of chang - ing consumer habits and the continued evolution of hybrid work arrangements, the office sector remains uncertain, with elevated vacancy rates in certain sub - markets, while well-located retail assets have demon - strated resilience and steady growth. The recent rise in mortgage interest rates and the Fed - eral Reserve’s attempt to corral rampant inflation have impacted real estate investors due to increased bor - rowing costs and reduced cash flow. Although inter - est rates have drifted down gradually, refinancing risk remains a concern for properties acquired or financed during the low-rate environment of 2020–2022. Higher vacancy rates persist in commercial buildings, both from the post-pandemic restructuring of the physical workplace and from increases in rent and operating costs. Many of the industrial sites being acquired are obtained from governmental or quasi-governmental regional or local development authorities; these acquisitions are generally intertwined with governmental incentives, such as real property tax abatements, cash grants and government-provided or government-financed infrastructure granted as an inducement to site selec - tion in South Carolina. In the financing area, private
905 CHAMBERS.COM
Powered by FlippingBook