Omar Bennett
South Carolina's tax laws contain several provisions that define what constitutes a taxable building in the state. These laws outline various exemptions, incentives, and assessments that determine whether a building is subject to property taxation. The criteria for taxability consider factors such as property type, ownership, usage, and specific agreements with local governments. Understanding these criteria is essential for property owners, businesses, and taxpayers in South Carolina to navigate their tax obligations effectively.
| Characteristics | Values |
|---|---|
| Definition of an abandoned building | A building or structure, clearly delineated from other buildings or structures, where at least 66% of the space has been closed continuously for business or non-operational for income-producing purposes for at least five years before the taxpayer files a "Notice of Intent to Rehabilitate." |
| Property tax exemptions | Inventories (raw materials, work-in-progress, finished goods), intangibles (stocks, dividends, interest), pollution control equipment, and certain manufacturing, research and development, corporate headquarters, office, and distribution facilities. |
| Partial property tax exemption (abatement) requirements | Manufacturing, research and development, corporate headquarters, office, and distribution facilities meeting specific requirements. |
| Manufacturer's property tax exemption | 42.8571% of the property tax value of manufacturing property assessed for tax purposes, up to a total exemption of $170 million for all entities in the state for that fiscal year. The exemption does not apply to property under a Fee-in-Lieu (FILOT) agreement or owned/leased by a public utility. |
| FILOT agreement eligibility | Companies with a total capital investment of $2.5 million or more, with a five-year investment period that can be extended by five years. The agreement offers reduced payments to local government and potential locked-in millage rates. |
| Fair Market Value determination | Real property is appraised, while tangible personal property is recorded at cost and depreciated using statutory depreciation rates for manufacturers and income tax depreciation for other businesses. |
| Property tax rebate eligibility | Individuals who previously resided in North Carolina and now reside in South Carolina due to boundary changes. The rebate is available for two years, including any partial year, and requires a copy of the last North Carolina county property tax assessment for the same motor vehicle. |
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What You'll Learn
Manufacturing property
In South Carolina, manufacturing property is classified as real property and is subject to property taxation. However, there are certain exemptions and incentives available for manufacturers.
For property tax purposes, 42.8571% of the value of manufacturing property assessed is exempt from property taxation, as long as the total exemption for all entities in the state does not exceed $170 million for that fiscal year. If the exemption amount is projected to exceed this value, it will be proportionally reduced. This exemption does not apply to property under a Fee-in-Lieu agreement.
The South Carolina Department of Revenue determines the fair market value of a manufacturer's real property (land and buildings) and personal property (machinery and equipment). The fair market value is then assessed at rates established in the State Constitution, and the local millage rate is applied to determine the property taxes. Millage rates in South Carolina are site-specific and set annually by the local government, with one mill being equal to $0.001.
Manufacturers are allowed to depreciate their personal property annually at a rate set by law according to the company's primary function. The most common depreciation rate is 11% per year. The Department of Revenue makes the final determination of the allowable depreciation.
Additionally, there are tax incentives for companies that improve, renovate, or redevelop abandoned sites for textile manufacturing operations. These companies may be eligible for a tax credit of 25% of the rehabilitation expenses, which can be taken in equal installments over five years.
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Property tax exemptions
South Carolina offers several property tax exemptions for its residents. These exemptions can be claimed for specific types of property, such as manufacturing property, inventories, and personal property.
For manufacturers, 42.8571% of the property tax value of manufacturing property is exempt from taxation. This exemption is applicable to both real property (land and buildings) and personal property (machinery and equipment). However, the total exemption amount for all entities in the state is capped at $170 million for each fiscal year, and it does not apply to property under a Fee-in-Lieu (FILOT) agreement.
South Carolina also exempts three classes of property from local property taxation: inventories (including raw materials, work-in-progress, and finished goods), intangibles (such as stocks, dividends, and interest), and pollution control equipment. Additionally, a partial property tax exemption, known as an abatement, may be available to manufacturing, research and development, corporate headquarters, office, and distribution facilities that meet certain requirements.
In terms of personal property, South Carolina law protects taxpayers by prohibiting any state other than their domicile from taxing their personal property. This protection is especially relevant when an individual's personal property may be present in multiple taxing jurisdictions within a single year.
Other specific exemptions include those for members of the armed forces. For instance, a private passenger motor vehicle leased by a service member who is stationed in South Carolina but has a home of record in another state may be exempt from property taxes.
For further information on property tax exemptions in South Carolina, residents can contact the South Carolina Department of Revenue.
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Abandoned buildings
In South Carolina, the term "abandoned building" refers to a structure where at least 66% of the space has been continuously closed to business or non-operational for income-generating purposes for a minimum of five years. The South Carolina Abandoned Buildings Revitalization Act, first enacted in 2013, offers tax credits to incentivize the rehabilitation and redevelopment of these abandoned buildings.
The Act provides two types of tax credits: income tax credits and property tax credits. Income tax credits are equal to 25% of the rehabilitation costs, up to a maximum of $700,000 per building site. This credit must be claimed in equal installments over three years, starting from when the building is placed back into service. Property tax credits, on the other hand, can be up to 25% of the total rehabilitation expenses but not exceeding 75% of the real property taxes due on the building. This credit can be claimed for up to eight years, starting from the tax year the building re-enters service.
To be eligible for these tax credits, taxpayers must meet certain requirements. Firstly, they must file a Notice of Intent to Rehabilitate with the South Carolina Department of Revenue before incurring any rehabilitation expenses. This notice must include estimated rehabilitation expenses and other relevant information. Secondly, the rehabilitation expenses must exceed certain thresholds ($75,000, $150,000, or $250,000) based on the population of the municipality where the building is located. Thirdly, the building must have been used for business or income-producing purposes before its abandonment, although there are exceptions to this rule. Finally, the taxpayer must incur at least 80% of the estimated rehabilitation costs outlined in the Notice of Intent to qualify for the credit.
The Abandoned Buildings Revitalization Act has been successful in promoting the redevelopment of abandoned buildings across South Carolina. It has encouraged private investment, preserved historical properties, created new jobs, and revitalized communities. The Act was initially set to expire in 2025 but was extended to December 31, 2035, by Governor Henry McMaster, recognizing the positive impact of this initiative.
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Real property
In South Carolina, real property is defined as the land and buildings owned by a business. The state's Department of Revenue determines the fair market value of real property, which is then assessed at rates established in the State Constitution. To determine the fair market value, real property is appraised, and the local millage rate is applied to the assessed value to determine the property taxes. Millage rates in South Carolina are site-specific and set annually by the local government, with one mill being equal to $0.001.
There are several exemptions to real property taxes in South Carolina. For example, all real property of churches is exempt, as long as no profit or benefit from any operation on the church's property benefits a private individual or stockholder, and there are no income-producing ventures located on the property.
Another exemption is for owner-occupied residential properties, which are eligible for a special assessment ratio and can be exempt from property taxes imposed for school operating purposes. Additionally, South Carolina exempts three classes of property from local property taxation: all inventories (raw materials, work-in-progress, and finished goods); all pollution control equipment; and all intangibles (stocks, dividends, and interest).
Manufacturers can also benefit from a property tax exemption of 42.8571% of the property tax value of manufacturing property, as long as the total amount of the exemption for all entities in the state does not exceed $170 million in a fiscal year. This exemption does not apply to property under a Fee-in-Lieu agreement.
A Fee-in-Lieu (FILOT) agreement can be negotiated by a county with a company if the total capital investment is $2.5 million or greater. The agreement can include both real and personal property, and it may result in significant savings for the company through a reduced assessment rate and a locked-in millage rate.
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Personal property
In South Carolina, "personal property" is distinct from "real property", which refers to real estate, such as houses, land, and mobile homes. Personal property includes vehicles such as cars, trucks, motorcycles, boats, and outboard motors (watercraft). It also includes documented vessels, airplanes, signs, and items used in rental properties, such as furnishings and appliances. Personal property tax applies to equipment, furniture, fixtures, and machinery used in the operation of businesses.
Trailers registered for personal use in South Carolina are exempt from personal property taxes. This includes utility trailers (open or closed bed), heavy equipment trailers, cargo trailers, boat trailers, farm trailers, dump trailers, dry van trailers, car trailers, and horse trailers. However, if a trailer has living quarters, it is treated as a camper/travel trailer and is subject to personal property taxes. Similarly, if a trailer is registered under a business name, a personal property tax bill must be created and paid before visiting the DMV.
The fair market value of personal property, such as machinery and equipment, is determined by the Department of Revenue to ensure equitable local treatment. This value is then assessed at rates established in the State Constitution, and the local millage rate is applied to determine the property taxes. Millage rates are site-specific and set annually by the local government, with a mill being equal to $0.001.
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Frequently asked questions
This act defines an "abandoned building" as a structure that is delineated from other buildings and has had at least 66% of its space closed continuously for business or non-operational for income-producing purposes for at least five years. Taxpayers who rehabilitate such abandoned buildings are eligible for tax credits.
South Carolina exempts three classes of property from local property taxation: inventories (raw materials, work-in-progress, and finished goods), intangibles (stocks, dividends, interest), and pollution control equipment.
42.8571% of the property tax value of manufacturing property assessed for tax purposes is exempt from property taxation, up to a total exemption of $170 million for all entities in the state in a fiscal year.
Real property is appraised to determine its fair market value, while tangible personal property is recorded at cost and then depreciated based on statutory depreciation rates. The fair market value is then assessed at rates established in the South Carolina Constitution.
FILOT stands for Fee-in-Lieu of Tax agreement. A county in South Carolina can negotiate a FILOT agreement with a company that plans to invest a minimum of $2.5 million. This agreement allows the company to reduce payments to the local government by negotiating a lower assessment rate.
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