We have performed infrared absorption spectroscopy and X-ray diffraction measurements on strained Si1-yCy layers grown by molecular beam epitaxy on Si substrates. Our experiments show that the formation of substitutional carbon and the appearance of beta-SiC precipitates depend on growth rate and growth temperature. Post-growth annealing experiments at temperatures higher than 850 degrees C cause the formation of beta-SiC precipitates accompanied by a decrease of substitutional carbon. The simulation of the X-ray data shows that substitutional carbon is lost mainly near the surface. Infrared absorption studies reveal that the loss is accompanied by the formation of beta-SiC precipitates in the near-surface region. Post growth moderate annealing experiments below 800 degrees C lead to a smaller linewidth for the carbon vibrational mode, indicating improved crystal quality.