South Carolina Property Tax
Transcript Of South Carolina Property Tax
South Carolina Property Tax
2015 Edition
The Honorable Nikki R. Haley, Governor Rick Reames III, Director
Disclaimer
This publication does not constitute tax, legal or other advice. The opinions expressed in any section of this publication are the individual opinions of the author of that section and should not be attributed to the South Carolina Department of Revenue. This publication is written in general terms and may not contain all of the specific requirements or provisions of cited authority and the authorities are subject to change. It is intended as a guide only, and the application of its contents to a specific situation will depend on the circumstances involved. This publication should not be relied on as a substitute for obtaining professional advice or for researching the specific sources of authority cited herein. Nothing in this publication supersedes, alters, or otherwise changes provisions of the South Carolina code, regulation, or the Department’s advisory opinions. This publication should not be relied upon as it does not represent official Department policy. The Department would appreciate receiving comments about this publication or notification of any errors. Comments should be sent to:
Jerilynn VanStory South Carolina Department of Revenue
Post Office Box 12265 Columbia, SC 29211 [email protected]
TABLE OF CONTENTS
CHAPTER
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I. PART I: § 001. INTRODUCTION. ..................................................... 1 A. Property Subject to Tax .................................................................... 1 B. Liability for Taxes on Real Property................................................. 1 C. Calculation of Tax............................................................................ 1 1. Valuation .................................................................................... 1 2. Assessment Ratio by Classification............................................. 2 3. Millage ....................................................................................... 2
II. PART II: § 100. DEFINITIONS AND CITATIONS ......................... 3 § 110. Definitions of Terms Used in this Publication ........................... 3 § 110.1. Real Property................................................................... 3 § 110.2. Personal Property............................................................. 3 § 110.3. The Department ............................................................... 3 § 120. Citations to Statutes, Regulations, and Case Law ....................... 4
III. PART III: § 200. CLASSIFICATION AND VALUATION OF PROPERTY.................................................... 4
§ 210. Classification Of Property ........................................................ 4 § 210.1. Purpose of Classification.................................................. 4 § 210.2. Classification of Companies ............................................. 4
§ 211. Manufacturers and Utilities ...................................................... 5 § 212. Agricultural Real Property .......................................................... 6
§ 212.1. Application for Classification of Property as Agricultural Real Property................................................................... 6
§ 212.2. Penalty for Falsifying Application ...................................... 6 § 212.3. Change in Use – Rollback Taxes......................................... 6 § 213. Transportation for Hire............................................................. 7 § 214. Personal Motor Vehicles ............................................................. 7 § 215. Aircraft ....................................................................................... 7 § 216. Commercial Fishing Boats .......................................................... 7 § 217. Legal Residence .............................................................................. 7 § 218. Non-Traditional Residences ............................................................ 9 § 219. Ratio for All Other Property ..................................................... 10 § 220. Valuation of Property ............................................................... 10 § 221. Valuation Methods .................................................................. 10 § 221.1. Valuation of Manufacturers’ Machinery and
Equipment .................................................................... 10 § 221.2. Valuation of Business Personal Property......................... 10 § 221.3. Valuation of Motor Vehicles, Aircraft, and Watercraft ..... 11 § 221.4. Valuation of Real Property............................................... 11 § 221.5. Valuation of Subdivided Acreage .................................... 12
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§ 221.6. Valuation of Real Property Subject to Lease ................... 13 § 221.7. Valuation of Utility Properties ......................................... 13 § 221.8. Valuation of Property of Homeowners’ Associations ........ 13 § 221.9. Valuation of Golf Courses............................................... 13 § 221.10. Valuation of Time Share Units.......................................... 13 § 221.11. Valuation of Low Income Housing Property ................... 14 § 222. Valuation of Agricultural Real Property.................................... 14 § 222.1. Method of Valuation ........................................................... 14 § 222.2. Definition of Agricultural Real Property ............................. 15 § 222.3. Additional Requirements for Agricultural Real Property..... 16 § 223. Valuation of “Rehabilitated Historic Property” and
“Low and Moderate Income Rental Property”............................. 17 § 223.1. Rehabilitated Historic Property .............................................. 17 § 223.2. Low and Moderate Income Rental Property ....................... 18 § 223.3. Application and Effective Date of Special Valuation for
“Rehabilitated Historic Property” and “Low and Moderate Income Rental Property” ................................. 19
IV. PART IV: § 300. ASSESSMENT PROCEDURE. ................................. 20 § 310. Assessment of Property ............................................................... 20 § 310.1. Lien Date ............................................................................ 20 § 310.2. Where Personal Property Is Taxed ...................................... 21 § 310.3. When Improvements Are Subject to Tax............................. 21 § 311. Notice to Taxpayer ................................................................... 22
V. PART V: § 400. ASSESSMENT PRACTICE BY TAXPAYERS........ 22 § 410. The Property Tax Case Summarized ......................................... 22 § 420. The Appraiser ............................................................................. 22 § 430. The Attorney............................................................................ 23 § 431. Appearance by Nonresident Attorneys......................................... 23 § 432. Appearances by In-House Attorneys and Officers ......................... 23 § 450. Other Persons .............................................................................. 23
VI. PART VI: § 500. APPEAL OF TAX ASSESSMENT ......................... 23 § 510. Determinations by the County Assessor ...................................... 23 § 515.Determinations by the County Auditor.............................. 25 § 520. Determinations by the Department Of Revenue .......................... 26 § 525. Contested Case Hearing before the Administrative Law Court (ALC) ................................................................. 27 § 530. Judicial Review ........................................................................... 27 § 535. Miscellaneous Relief - Waiver, Dismissal, or Reduction of Penalty .................................................................................... 27 § 536. Miscellaneous Relief - Claims for Refund ..................................... 28 § 536.1. Determinations by the County Assessor.................................. 28
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§ 536.2. Determinations by the County Auditor................................ 28 § 536.3. Determinations by the Department of Revenue ................... 29 § 540. Practice and Procedure ............................................................. 29 § 541. Use of Appraisals and Expert Witnesses ................................... 29 § 543. Forms and Pleadings ................................................................ 29 § 544. Method of Filing/Delivery........................................................ 30 § 545. Appearances for the Taxpayer .................................................. 30 § 550. Payment of Property Tax and Protest Procedure......................... 30 § 561. Exhaustion of Administrative Remedies ......................................... 31 § 562. Class Action Lawsuits .............................................................. 31
VII. PART VII: § 600. EXEMPTION FROM TAXATION ...................... 31 § 601. Generally; Fees for Fire Protection ........................................... 31 § 609. Exemptions Related to Classification of Real Property (Non-Manufacturing) ...................................................................... 32 § 609.1. Exemption for All Residential Real Property Subject to a 4% Assessment Ratio ............................................. 32 § 609.2. Exemption for Eligible Real Property Subject to a 6% Assessment Ratio............................................................. 32 § 610. Intangible Personal Property..................................................... 33 § 611. Fire Sprinkler System Equipment ................................................ 33 § 612. Certain Personal Use Property and Other Miscellaneous Property ................................................................................ 33 § 612.1. Household Goods............................................................. 33 § 612.2. Wearing Apparel................................................................. 33 § 612.3. Private Passenger Vehicles, Motorcycles, General Aviation Aircraft and Watercraft ...................................... 33 § 612.4. Private Passenger Vehicle of Certain Military Personnel..... 33 § 613. Economic Development Related Exemptions .............................. 34 § 613.1. Inventories.............................................................................. 34 § 613.2. Manufacturing .................................................................... 34 § 613.3. Pollution Control ................................................................ 34 § 613.4. Environmental Cleanup Site ............................................. 35 § 613.5. Corporate Headquarters, and Corporate Office and Distribution Facilities.................................................... 35 § 613.6. Research and Development .............................................. 36 § 613.7. Air Carrier Hubs .............................................................. 36 § 613.8. New Single Family Housing for Sale by a Builder ................. 36 § 613.9. Trailers and Semitrailers Used By Motor Carriers............. 37 § 613.10. Personal Property in Transit ........................................... 37 § 613.11. Multicounty Industrial Parks .......................................... 37 § 614. Agricultural Personal Property ................................................. 37 § 615. Other Particular Businesses ...................................................... 38 § 616. Public Ownership and Public Use or Benefit............................. 38 § 616.1. Publicly Owned Property................................................. 38 § 616.2. Public Use or Benefit ....................................................... 39
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§ 617. Certain Nonprofit, Charitable, Religious, Educational, and Fraternal Organizations................................................... 40
§ 618. Disabled Persons and Certain Veterans ....................................... 44 § 619. Homestead Exemption for the Elderly, Disabled or Blind............ 46 § 640. Practice and Procedure in Exemption Cases ................................ 47 § 641. Exemption Cases (Other than the Homestead Exemption) ........... 47
§ 641.1. Application for Exemption.................................................. 47 § 641.2. Appeal When Exemption Denied or Revoked ........................ 48 § 641.3. Refunds ........................................................................... 48 § 642. The Homestead Exemption....................................................... 48 § 642.1. Application for Exemption ............................................... 48 § 642.2. Appeal When Exemption Denied or Revoked ................... 49 § 642.3. Refunds .............................................................................. 49 § 642.4. Refund—Exception to the necessity of making
application.................................................................... 49
VIII. PART VIII: § 700. MISCELLANEOUS ITEMS ............................. 49 § 710. Economic Development Incentives .......................................... 49 § 711. Tax Credits .............................................................................. 49 § 711.1. Incentive for Rehabilitating an Abandoned Textile Mill Site............................................................ 49 § 711.2. Incentive for Rehabilitating Abandoned Retail Facilities .. 51 § 711.3. Incentive for Rehabilitating Abandoned Buildings............ 51 § 711.4. Incentive for Installing a Fire Sprinkler System ................ 54 § 712. Fee in Lieu of Property Taxes.................................................. 54 § 712.1. Introduction .................................................................... 54 § 712.2. Little Fee............................................................. 56 Steps in the Little Fee Process ...................................... 56 Definition and Location of Project......................................... 57 County Must Make Findings of Public Purpose...................... 57 Required Investment and Timing of Investment ...................... 57 Period Property May Be Subject to the Fee................................. 59 Property Eligible for Fee............................................................. 59 Disposal of Property and Replacement Property......................... 59 Rollback Taxes ............................................................................ 60 Timing of Investment Expenditures and Purchases...................... 60 Inducement Agreement ............................................................. 60 Millage Rate Agreement........................................................... 61 Timing of the Initial Lease Agreement...................................... 61 Valuation for Fee Purposes...................................................... 61 Financing Agreements ................................................................. 61 Amendment of Agreements ....................................................... 61 Transfers of Fee Agreements or Property Subject to the Fee ..... 62 Payment Procedures and Record Keeping Requirements.......... 62 Termination of Fee and Lease Agreement ................................... 62
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Expiration of Fee Period and Maintaining the Minimum Investment ....................................................................... 62
Credit Against the Fee ................................................................. 62 § 712.3. Big Fee................................................................ 63
Steps in the Big Fee Process........................................................ 63 Definition and Location of Project .............................................. 63 Required Investment and Timing of Investment ........................... 64 Period Property May Be Subject to the Fee ................................ 65 Property Eligible for Fee....................................................... 65 Disposal of Property and Replacement Property .................... 66 Rollback Taxes...................................................................... 67 Timing of Investment Expenditures and Purchases ................... 67 Inducement Agreement ................................................................ 67 Millage Rate Agreement .............................................................. 67 Timing of the Initial Lease Agreement...................................... 68 Valuation of Fee Purposes ....................................................... 68 Additional Method of Calculating Fee ..................................... 68 Financing Agreements ............................................................. 68 Amendment of Agreements ....................................................... 68 Transfers of Fee Agreements or Property Subject to the Fee .... 68 Payment Procedures and Record Keeping Requirements.......... 69 Termination of the Fee and Lease Agreement ......................... 69 Expiration of Fee Period and Maintaining the Minimum
Investment ....................................................................... 69 Credit Against the Fee........................................................... 70 Special Rules for Qualified Recycling Facilities..................... 70 § 712.4. Simplified Fee ........................................................ 70 Steps in the Simplified Fee Process........................................ 70 Definition and Location of the Project ..................................... 71 County Must Make Findings of Public Purpose...................... 71 Required Investment and Timing of the Investment................. 71 Period Property May Be Subject to the Fee.............................. 73 Property Eligible for the Fee ................................................... 73 Disposal of Property and Replacement Property...................... 73 Rollback Taxes......................................................................... 74 Timing of Investment Expenditures and Purchases ................... 74 The Inducement, Millage Rate, and Lease Agreements................ 74 Inducement Resolution ............................................................. 74 The Fee Agreement .................................................................. 74 Valuation for Fee Purposes...................................................... 75 Additional Method of Calculating Fee ..................................... 75 Financing Agreements ................................................................. 75 Amendment of Agreements ....................................................... 75 Transfers of Fee Agreements or Property Subject to the Fee .... 76
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Payment Procedures and Record Keeping Requirements.......... 76 Termination of the Fee and Fee Agreement .............................. 76 Expiration of Exemption Period and Maintaining the Minimum
Investment ....................................................................... 77 Credit Against the Fee ............................................................. 77 Transitional Rules for Projects Under Existing Fee ................. 77 § 712.5. Super and Enhanced Investment Fees ............................... 77 § 712.6. Special Source Revenue Bonds ........................................ 79 § 712.7. Fee in Lieu Reduced Investment Counties ........................ 80 § 713. Property Tax Reform........................................................................ 80 § 714. Constitutional Issues ................................................................... 81 § 714.1. The Power of Local Government to Grant Exemptions ..... 81 § 714.2. The Meaning of “Exclusively for Public Purposes” in the
Context of Public Property Leased to Private Entities .... 81 § 714.3. No Taxation without Representation ................................... 82 § 715. Impact of Declining Property Values on Assessment of Real
Property ................................................................................ 82 § 720. Jurisdiction of State & Local Agencies ..................................... 83 § 721. How To Contact The South Carolina Department of
Revenue ................................................................................ 83 § 724. The County Property Tax Officials .................................. 84 § 731. How To Obtain Forms.............................................................. 90 § 732. The Basic Property Tax Forms ................................................. 90 § 733. Other Forms of Possible Interest............................................... 90
SOUTH CAROLINA PROPERTY TAX March 2015
PART I: § 001. INTRODUCTION.
A. Property Subject to Tax: Property subject to ad valorem tax includes real property, personal property used in business, and certain other personal property such as motor vehicles, boats and airplanes. Property taxes are generally assessed and collected by local governments, but the South Carolina Department of Revenue (the Department) assesses and collects some property taxes and oversees all property tax assessments to ensure equitable and uniform assessment throughout the state. There is no state or local tax on intangible personal property or inventories.
B. Liability for Taxes on Real Property: In general, the person who owns real property on the lien date (December 31st of the year preceding the tax year) in fee simple, for life, or as trustee, as recorded in the public records for deeds, or who has the care of the property as guardian, executor, trustee, or committee on the lien date is liable for the payment of the taxes on the real property. SC Code §§12-37-610 and 12-49-20. A leasehold interest will be subject to ad valorem tax if real property that is subject to a property tax exemption is leased for a definite term and the lessee does not qualify for an exemption. SC Code §12-37-950; see Clarendon County ex rel. Clarendon County Assessor v. TYKAT, Inc., 394 S.C. 21, 714 S.E.2d 305 (2011). See also SC Code §31-23-40(D) (apportioning tax liability between a community land trust and a lessee).
In general, property taxes are due and payable between September 30th and January 15th after their yearly assessment. SC Code §12-45-70; see SC Code §12-38-150. There are special rules fixing liability and due dates for taxpayers that make returns to the Department on a fiscal year basis. See SC Code §12-37-970 and SC Revenue Ruling 05-20.
C. Calculation of Tax: The calculation of property taxes involves the following 3 elements:
1. Valuation: Real property (other than agricultural real property and most property subject to a negotiated fee in lieu of taxes) is appraised to determine fair market value.
Real property is reappraised on a countywide basis every five years and is usually subject to reassessment (i.e., assessment based on the reappraised value) in the next year. SC Code §12-43-217. For purposes of this reassessment, any increase in the fair market value of any parcel is limited to 15%. This cap on value remains in effect until an “assessable transfer of interest” or “ATI” occurs. An ATI will result in a valuation not limited by the 15% cap. A non-exclusive list of events that constitute an ATI is provided in SC Code §12-37-3150. Certain property that undergoes an ATI after 2010 may be eligible for a partial exemption/alternate valuation.
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The fair market value of improvements and additions will be added to the fair market value of a parcel after completion. The 15% cap does not apply to the fair market value of improvements and additions in the year they are first subject to property tax. See SC Code §§12-43-217 and 12-37-3120 through 12-37-3170. Valuation of real property is discussed further in §§220 and 221.4 below.
Personal property of manufacturers is valued at cost from which a fixed depreciation percentage is deducted each year until a residual value is reached. Personal property of merchants and other businesses is valued at cost from which income tax depreciation is deducted each year until a residual value is reached. Motor vehicles are valued in accordance with nationally recognized publications of value (except that the value may not exceed 95% of the prior year’s value) from which discounts are allowed for high mileage. Utilities are valued using the unit valuation method considering the utilities’ operations as a whole. See §221 below.
2. Assessment Ratio by Classification: The assessment ratios are established for each class of property in the State Constitution to ensure stability. All manufacturing and utility property is assessed at 10.5%. Commercial personal property is also assessed at 10.5%. A person’s primary residence is assessed at 4%, if qualified for the legal residence rate; other real property is assessed at 6%. Personal motor vehicles are assessed at 6%.
The fair market value is multiplied by the assessment ratio to produce the “assessed value” of a particular piece of property. Taxes are levied based on this assessed value. New and expanding businesses that invest $2.5 million or more ($1 million or more in certain counties and certain environmental clean-up sites) can enter into a fee in lieu of property taxes, which can reduce a 10.5% assessment ratio to 6% for 20 or more years and eliminate inflationary increases in the value of real property for that period. Very large investments can qualify for a fee in lieu of property taxes with a 4% assessment ratio for 30 or more years with no increase in the value of real property for that period. See §712 below.
3. Millage: Each taxing jurisdiction determines its tax rate annually by dividing the cost of its annual budget by the total assessed value within the taxing jurisdiction. This results in a fraction in thousandths (mills), known as the millage rate or millage. The average millage rate in South Carolina for 2014 is 317.7 mills.
The following is an example of the application of the property tax. If a manufacturer owned a piece of property with a value of $100 and an assessment ratio of 10.5% (the ratio for manufacturing property in the absence of a fee in lieu of property taxes agreement), the assessed value of that property equals $10.50 ($100 x 10.5%). If the taxing jurisdiction decided in a particular year to levy a tax of 275 mills, the property tax liability of the owner would be $2.89 ($10.50 x .275).
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2015 Edition
The Honorable Nikki R. Haley, Governor Rick Reames III, Director
Disclaimer
This publication does not constitute tax, legal or other advice. The opinions expressed in any section of this publication are the individual opinions of the author of that section and should not be attributed to the South Carolina Department of Revenue. This publication is written in general terms and may not contain all of the specific requirements or provisions of cited authority and the authorities are subject to change. It is intended as a guide only, and the application of its contents to a specific situation will depend on the circumstances involved. This publication should not be relied on as a substitute for obtaining professional advice or for researching the specific sources of authority cited herein. Nothing in this publication supersedes, alters, or otherwise changes provisions of the South Carolina code, regulation, or the Department’s advisory opinions. This publication should not be relied upon as it does not represent official Department policy. The Department would appreciate receiving comments about this publication or notification of any errors. Comments should be sent to:
Jerilynn VanStory South Carolina Department of Revenue
Post Office Box 12265 Columbia, SC 29211 [email protected]
TABLE OF CONTENTS
CHAPTER
PAGE #
I. PART I: § 001. INTRODUCTION. ..................................................... 1 A. Property Subject to Tax .................................................................... 1 B. Liability for Taxes on Real Property................................................. 1 C. Calculation of Tax............................................................................ 1 1. Valuation .................................................................................... 1 2. Assessment Ratio by Classification............................................. 2 3. Millage ....................................................................................... 2
II. PART II: § 100. DEFINITIONS AND CITATIONS ......................... 3 § 110. Definitions of Terms Used in this Publication ........................... 3 § 110.1. Real Property................................................................... 3 § 110.2. Personal Property............................................................. 3 § 110.3. The Department ............................................................... 3 § 120. Citations to Statutes, Regulations, and Case Law ....................... 4
III. PART III: § 200. CLASSIFICATION AND VALUATION OF PROPERTY.................................................... 4
§ 210. Classification Of Property ........................................................ 4 § 210.1. Purpose of Classification.................................................. 4 § 210.2. Classification of Companies ............................................. 4
§ 211. Manufacturers and Utilities ...................................................... 5 § 212. Agricultural Real Property .......................................................... 6
§ 212.1. Application for Classification of Property as Agricultural Real Property................................................................... 6
§ 212.2. Penalty for Falsifying Application ...................................... 6 § 212.3. Change in Use – Rollback Taxes......................................... 6 § 213. Transportation for Hire............................................................. 7 § 214. Personal Motor Vehicles ............................................................. 7 § 215. Aircraft ....................................................................................... 7 § 216. Commercial Fishing Boats .......................................................... 7 § 217. Legal Residence .............................................................................. 7 § 218. Non-Traditional Residences ............................................................ 9 § 219. Ratio for All Other Property ..................................................... 10 § 220. Valuation of Property ............................................................... 10 § 221. Valuation Methods .................................................................. 10 § 221.1. Valuation of Manufacturers’ Machinery and
Equipment .................................................................... 10 § 221.2. Valuation of Business Personal Property......................... 10 § 221.3. Valuation of Motor Vehicles, Aircraft, and Watercraft ..... 11 § 221.4. Valuation of Real Property............................................... 11 § 221.5. Valuation of Subdivided Acreage .................................... 12
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§ 221.6. Valuation of Real Property Subject to Lease ................... 13 § 221.7. Valuation of Utility Properties ......................................... 13 § 221.8. Valuation of Property of Homeowners’ Associations ........ 13 § 221.9. Valuation of Golf Courses............................................... 13 § 221.10. Valuation of Time Share Units.......................................... 13 § 221.11. Valuation of Low Income Housing Property ................... 14 § 222. Valuation of Agricultural Real Property.................................... 14 § 222.1. Method of Valuation ........................................................... 14 § 222.2. Definition of Agricultural Real Property ............................. 15 § 222.3. Additional Requirements for Agricultural Real Property..... 16 § 223. Valuation of “Rehabilitated Historic Property” and
“Low and Moderate Income Rental Property”............................. 17 § 223.1. Rehabilitated Historic Property .............................................. 17 § 223.2. Low and Moderate Income Rental Property ....................... 18 § 223.3. Application and Effective Date of Special Valuation for
“Rehabilitated Historic Property” and “Low and Moderate Income Rental Property” ................................. 19
IV. PART IV: § 300. ASSESSMENT PROCEDURE. ................................. 20 § 310. Assessment of Property ............................................................... 20 § 310.1. Lien Date ............................................................................ 20 § 310.2. Where Personal Property Is Taxed ...................................... 21 § 310.3. When Improvements Are Subject to Tax............................. 21 § 311. Notice to Taxpayer ................................................................... 22
V. PART V: § 400. ASSESSMENT PRACTICE BY TAXPAYERS........ 22 § 410. The Property Tax Case Summarized ......................................... 22 § 420. The Appraiser ............................................................................. 22 § 430. The Attorney............................................................................ 23 § 431. Appearance by Nonresident Attorneys......................................... 23 § 432. Appearances by In-House Attorneys and Officers ......................... 23 § 450. Other Persons .............................................................................. 23
VI. PART VI: § 500. APPEAL OF TAX ASSESSMENT ......................... 23 § 510. Determinations by the County Assessor ...................................... 23 § 515.Determinations by the County Auditor.............................. 25 § 520. Determinations by the Department Of Revenue .......................... 26 § 525. Contested Case Hearing before the Administrative Law Court (ALC) ................................................................. 27 § 530. Judicial Review ........................................................................... 27 § 535. Miscellaneous Relief - Waiver, Dismissal, or Reduction of Penalty .................................................................................... 27 § 536. Miscellaneous Relief - Claims for Refund ..................................... 28 § 536.1. Determinations by the County Assessor.................................. 28
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§ 536.2. Determinations by the County Auditor................................ 28 § 536.3. Determinations by the Department of Revenue ................... 29 § 540. Practice and Procedure ............................................................. 29 § 541. Use of Appraisals and Expert Witnesses ................................... 29 § 543. Forms and Pleadings ................................................................ 29 § 544. Method of Filing/Delivery........................................................ 30 § 545. Appearances for the Taxpayer .................................................. 30 § 550. Payment of Property Tax and Protest Procedure......................... 30 § 561. Exhaustion of Administrative Remedies ......................................... 31 § 562. Class Action Lawsuits .............................................................. 31
VII. PART VII: § 600. EXEMPTION FROM TAXATION ...................... 31 § 601. Generally; Fees for Fire Protection ........................................... 31 § 609. Exemptions Related to Classification of Real Property (Non-Manufacturing) ...................................................................... 32 § 609.1. Exemption for All Residential Real Property Subject to a 4% Assessment Ratio ............................................. 32 § 609.2. Exemption for Eligible Real Property Subject to a 6% Assessment Ratio............................................................. 32 § 610. Intangible Personal Property..................................................... 33 § 611. Fire Sprinkler System Equipment ................................................ 33 § 612. Certain Personal Use Property and Other Miscellaneous Property ................................................................................ 33 § 612.1. Household Goods............................................................. 33 § 612.2. Wearing Apparel................................................................. 33 § 612.3. Private Passenger Vehicles, Motorcycles, General Aviation Aircraft and Watercraft ...................................... 33 § 612.4. Private Passenger Vehicle of Certain Military Personnel..... 33 § 613. Economic Development Related Exemptions .............................. 34 § 613.1. Inventories.............................................................................. 34 § 613.2. Manufacturing .................................................................... 34 § 613.3. Pollution Control ................................................................ 34 § 613.4. Environmental Cleanup Site ............................................. 35 § 613.5. Corporate Headquarters, and Corporate Office and Distribution Facilities.................................................... 35 § 613.6. Research and Development .............................................. 36 § 613.7. Air Carrier Hubs .............................................................. 36 § 613.8. New Single Family Housing for Sale by a Builder ................. 36 § 613.9. Trailers and Semitrailers Used By Motor Carriers............. 37 § 613.10. Personal Property in Transit ........................................... 37 § 613.11. Multicounty Industrial Parks .......................................... 37 § 614. Agricultural Personal Property ................................................. 37 § 615. Other Particular Businesses ...................................................... 38 § 616. Public Ownership and Public Use or Benefit............................. 38 § 616.1. Publicly Owned Property................................................. 38 § 616.2. Public Use or Benefit ....................................................... 39
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§ 617. Certain Nonprofit, Charitable, Religious, Educational, and Fraternal Organizations................................................... 40
§ 618. Disabled Persons and Certain Veterans ....................................... 44 § 619. Homestead Exemption for the Elderly, Disabled or Blind............ 46 § 640. Practice and Procedure in Exemption Cases ................................ 47 § 641. Exemption Cases (Other than the Homestead Exemption) ........... 47
§ 641.1. Application for Exemption.................................................. 47 § 641.2. Appeal When Exemption Denied or Revoked ........................ 48 § 641.3. Refunds ........................................................................... 48 § 642. The Homestead Exemption....................................................... 48 § 642.1. Application for Exemption ............................................... 48 § 642.2. Appeal When Exemption Denied or Revoked ................... 49 § 642.3. Refunds .............................................................................. 49 § 642.4. Refund—Exception to the necessity of making
application.................................................................... 49
VIII. PART VIII: § 700. MISCELLANEOUS ITEMS ............................. 49 § 710. Economic Development Incentives .......................................... 49 § 711. Tax Credits .............................................................................. 49 § 711.1. Incentive for Rehabilitating an Abandoned Textile Mill Site............................................................ 49 § 711.2. Incentive for Rehabilitating Abandoned Retail Facilities .. 51 § 711.3. Incentive for Rehabilitating Abandoned Buildings............ 51 § 711.4. Incentive for Installing a Fire Sprinkler System ................ 54 § 712. Fee in Lieu of Property Taxes.................................................. 54 § 712.1. Introduction .................................................................... 54 § 712.2. Little Fee............................................................. 56 Steps in the Little Fee Process ...................................... 56 Definition and Location of Project......................................... 57 County Must Make Findings of Public Purpose...................... 57 Required Investment and Timing of Investment ...................... 57 Period Property May Be Subject to the Fee................................. 59 Property Eligible for Fee............................................................. 59 Disposal of Property and Replacement Property......................... 59 Rollback Taxes ............................................................................ 60 Timing of Investment Expenditures and Purchases...................... 60 Inducement Agreement ............................................................. 60 Millage Rate Agreement........................................................... 61 Timing of the Initial Lease Agreement...................................... 61 Valuation for Fee Purposes...................................................... 61 Financing Agreements ................................................................. 61 Amendment of Agreements ....................................................... 61 Transfers of Fee Agreements or Property Subject to the Fee ..... 62 Payment Procedures and Record Keeping Requirements.......... 62 Termination of Fee and Lease Agreement ................................... 62
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Expiration of Fee Period and Maintaining the Minimum Investment ....................................................................... 62
Credit Against the Fee ................................................................. 62 § 712.3. Big Fee................................................................ 63
Steps in the Big Fee Process........................................................ 63 Definition and Location of Project .............................................. 63 Required Investment and Timing of Investment ........................... 64 Period Property May Be Subject to the Fee ................................ 65 Property Eligible for Fee....................................................... 65 Disposal of Property and Replacement Property .................... 66 Rollback Taxes...................................................................... 67 Timing of Investment Expenditures and Purchases ................... 67 Inducement Agreement ................................................................ 67 Millage Rate Agreement .............................................................. 67 Timing of the Initial Lease Agreement...................................... 68 Valuation of Fee Purposes ....................................................... 68 Additional Method of Calculating Fee ..................................... 68 Financing Agreements ............................................................. 68 Amendment of Agreements ....................................................... 68 Transfers of Fee Agreements or Property Subject to the Fee .... 68 Payment Procedures and Record Keeping Requirements.......... 69 Termination of the Fee and Lease Agreement ......................... 69 Expiration of Fee Period and Maintaining the Minimum
Investment ....................................................................... 69 Credit Against the Fee........................................................... 70 Special Rules for Qualified Recycling Facilities..................... 70 § 712.4. Simplified Fee ........................................................ 70 Steps in the Simplified Fee Process........................................ 70 Definition and Location of the Project ..................................... 71 County Must Make Findings of Public Purpose...................... 71 Required Investment and Timing of the Investment................. 71 Period Property May Be Subject to the Fee.............................. 73 Property Eligible for the Fee ................................................... 73 Disposal of Property and Replacement Property...................... 73 Rollback Taxes......................................................................... 74 Timing of Investment Expenditures and Purchases ................... 74 The Inducement, Millage Rate, and Lease Agreements................ 74 Inducement Resolution ............................................................. 74 The Fee Agreement .................................................................. 74 Valuation for Fee Purposes...................................................... 75 Additional Method of Calculating Fee ..................................... 75 Financing Agreements ................................................................. 75 Amendment of Agreements ....................................................... 75 Transfers of Fee Agreements or Property Subject to the Fee .... 76
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Payment Procedures and Record Keeping Requirements.......... 76 Termination of the Fee and Fee Agreement .............................. 76 Expiration of Exemption Period and Maintaining the Minimum
Investment ....................................................................... 77 Credit Against the Fee ............................................................. 77 Transitional Rules for Projects Under Existing Fee ................. 77 § 712.5. Super and Enhanced Investment Fees ............................... 77 § 712.6. Special Source Revenue Bonds ........................................ 79 § 712.7. Fee in Lieu Reduced Investment Counties ........................ 80 § 713. Property Tax Reform........................................................................ 80 § 714. Constitutional Issues ................................................................... 81 § 714.1. The Power of Local Government to Grant Exemptions ..... 81 § 714.2. The Meaning of “Exclusively for Public Purposes” in the
Context of Public Property Leased to Private Entities .... 81 § 714.3. No Taxation without Representation ................................... 82 § 715. Impact of Declining Property Values on Assessment of Real
Property ................................................................................ 82 § 720. Jurisdiction of State & Local Agencies ..................................... 83 § 721. How To Contact The South Carolina Department of
Revenue ................................................................................ 83 § 724. The County Property Tax Officials .................................. 84 § 731. How To Obtain Forms.............................................................. 90 § 732. The Basic Property Tax Forms ................................................. 90 § 733. Other Forms of Possible Interest............................................... 90
SOUTH CAROLINA PROPERTY TAX March 2015
PART I: § 001. INTRODUCTION.
A. Property Subject to Tax: Property subject to ad valorem tax includes real property, personal property used in business, and certain other personal property such as motor vehicles, boats and airplanes. Property taxes are generally assessed and collected by local governments, but the South Carolina Department of Revenue (the Department) assesses and collects some property taxes and oversees all property tax assessments to ensure equitable and uniform assessment throughout the state. There is no state or local tax on intangible personal property or inventories.
B. Liability for Taxes on Real Property: In general, the person who owns real property on the lien date (December 31st of the year preceding the tax year) in fee simple, for life, or as trustee, as recorded in the public records for deeds, or who has the care of the property as guardian, executor, trustee, or committee on the lien date is liable for the payment of the taxes on the real property. SC Code §§12-37-610 and 12-49-20. A leasehold interest will be subject to ad valorem tax if real property that is subject to a property tax exemption is leased for a definite term and the lessee does not qualify for an exemption. SC Code §12-37-950; see Clarendon County ex rel. Clarendon County Assessor v. TYKAT, Inc., 394 S.C. 21, 714 S.E.2d 305 (2011). See also SC Code §31-23-40(D) (apportioning tax liability between a community land trust and a lessee).
In general, property taxes are due and payable between September 30th and January 15th after their yearly assessment. SC Code §12-45-70; see SC Code §12-38-150. There are special rules fixing liability and due dates for taxpayers that make returns to the Department on a fiscal year basis. See SC Code §12-37-970 and SC Revenue Ruling 05-20.
C. Calculation of Tax: The calculation of property taxes involves the following 3 elements:
1. Valuation: Real property (other than agricultural real property and most property subject to a negotiated fee in lieu of taxes) is appraised to determine fair market value.
Real property is reappraised on a countywide basis every five years and is usually subject to reassessment (i.e., assessment based on the reappraised value) in the next year. SC Code §12-43-217. For purposes of this reassessment, any increase in the fair market value of any parcel is limited to 15%. This cap on value remains in effect until an “assessable transfer of interest” or “ATI” occurs. An ATI will result in a valuation not limited by the 15% cap. A non-exclusive list of events that constitute an ATI is provided in SC Code §12-37-3150. Certain property that undergoes an ATI after 2010 may be eligible for a partial exemption/alternate valuation.
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The fair market value of improvements and additions will be added to the fair market value of a parcel after completion. The 15% cap does not apply to the fair market value of improvements and additions in the year they are first subject to property tax. See SC Code §§12-43-217 and 12-37-3120 through 12-37-3170. Valuation of real property is discussed further in §§220 and 221.4 below.
Personal property of manufacturers is valued at cost from which a fixed depreciation percentage is deducted each year until a residual value is reached. Personal property of merchants and other businesses is valued at cost from which income tax depreciation is deducted each year until a residual value is reached. Motor vehicles are valued in accordance with nationally recognized publications of value (except that the value may not exceed 95% of the prior year’s value) from which discounts are allowed for high mileage. Utilities are valued using the unit valuation method considering the utilities’ operations as a whole. See §221 below.
2. Assessment Ratio by Classification: The assessment ratios are established for each class of property in the State Constitution to ensure stability. All manufacturing and utility property is assessed at 10.5%. Commercial personal property is also assessed at 10.5%. A person’s primary residence is assessed at 4%, if qualified for the legal residence rate; other real property is assessed at 6%. Personal motor vehicles are assessed at 6%.
The fair market value is multiplied by the assessment ratio to produce the “assessed value” of a particular piece of property. Taxes are levied based on this assessed value. New and expanding businesses that invest $2.5 million or more ($1 million or more in certain counties and certain environmental clean-up sites) can enter into a fee in lieu of property taxes, which can reduce a 10.5% assessment ratio to 6% for 20 or more years and eliminate inflationary increases in the value of real property for that period. Very large investments can qualify for a fee in lieu of property taxes with a 4% assessment ratio for 30 or more years with no increase in the value of real property for that period. See §712 below.
3. Millage: Each taxing jurisdiction determines its tax rate annually by dividing the cost of its annual budget by the total assessed value within the taxing jurisdiction. This results in a fraction in thousandths (mills), known as the millage rate or millage. The average millage rate in South Carolina for 2014 is 317.7 mills.
The following is an example of the application of the property tax. If a manufacturer owned a piece of property with a value of $100 and an assessment ratio of 10.5% (the ratio for manufacturing property in the absence of a fee in lieu of property taxes agreement), the assessed value of that property equals $10.50 ($100 x 10.5%). If the taxing jurisdiction decided in a particular year to levy a tax of 275 mills, the property tax liability of the owner would be $2.89 ($10.50 x .275).
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