Hello REALTORS®,
It’s the New Year, and an important deadline looms for some property owners who may be eligible for relief from property taxes: January 31.
Assessable Transfer of Interest
The 25% assessable transfer of interest (ATI) exemption allows a taxpayer to reduce the property tax value of certain newly acquired property by as much as 25%.
If you or your clients have acquired second homes, rentals, and commercial property in South Carolina in the last few years, you may be eligible for this savings on your property taxes. Check with your property tax advisor to see if you qualify and should apply. You must apply each year until the next time your property is reassessed. The deadline to apply or reapply is January 31.
Note that the exemption does not apply to agricultural property, personal residences, or property that is assessed by the South Carolina Department of Revenue, like manufacturing utility properties.
Rollback Tax Exemption for Unsold New Homes
The Rollback Tax is a complex tax code that does not affect most property owners. However, if you are a home builder, or represent a home builder, there is an important exemption you both should be aware of.
If a home builder builds a new home on spec and is still holding that spec home on January 1 of the following year, they can apply to continue paying the property tax rate that applied before the home was built. Builders can reapply for up to 5 five years, if they hold the spec home that long. But they must apply for this relief, and they must apply every year by January 31 for any home they have not sold by December 31.
Business Licenses
Most cities in South Carolina require a business license to conduct business in their city. Nearly all of them impose a business license tax as well. The tax is not insignificant. In fact, most cities receive a substantial portion of their revenue, sometimes as high as 30%, from business license taxes.
Some counties require a business license as well, but only eight impose a business license tax—none in the Western Upstate. Counties that require a business license do so primarily so they can revoke it if a business is misbehaving, not to raise revenue.
What the law says (and how it helps Realtors)
Business licenses and taxes are allowed under state law, but local ordinances also must comply with state law. That law was updated in 2022 by legislation that your REALTORS® Association supported.
Under that legislation, the business license tax for a real estate brokerage is paid only by the broker, not the broker’s agents. In addition, the broker pays the tax only on the revenue they keep, not the total revenue of the brokerage. Therefore, if a broker collects and passes through revenue to another business, that revenue belongs to the other business and is not subject to tax.
There are two more important points to know about business license taxes:
- If your business is located where business license taxes are not collected, you may still be required to pay business license taxes in a city or county that collects the tax if you do business there. However, you will only be taxed on the revenue you receive doing business in that city.
- If you do business where business license taxes are collected, you may be required by that city to pay the business license tax on the full revenue of your business. However, if a portion of your business’ revenue was taxed by another city, you can exempt that revenue from the tax you pay where your business is located. In other words, two cities can’t tax the same revenue.
Both points demonstrate the importance of keeping detailed records of your business’ revenue if you are doing business in multiple cities.
It’s also important to note that if you are doing business in a city that requires a business license, you should get a business license and pay any relevant taxes. If you don’t, you should expect to receive a demand letter from the city. Posting a real estate sign is visible evidence that you are doing business in a city.
Anderson County Short Term Rental Regulation
Anderson County requires certain properties to have a special exception permit to operate a short-term rental. Properties that are zoned R-40, R-20, R-15, R-12, R-10, and R-8 require a special exception permit from the Board of Zoning Appeals for “bed and breakfasts, host homes, and guest homes.” In other words, short-term rentals. Property owners also are required to pay appropriate hospitality taxes (and the county verifies compliance).
This permit applies only in zoned areas, and most of the county is not zoned. But Realtors can help their clients who are buying or selling short-term rentals by checking the zoning status of the property.
How can you help?
Advocacy is an important part of the way your Realtors Association represents Realtors. There are two important ways you can help:
- Vote
- Contribute to RPAC
RPAC is an important part of our association’s advocacy efforts. Success hinges on the election of Realtor Champions. My favorite quote, at least recently, is that there are two kinds of politicians, those who raise money, and those who lose.
RPAC’s objective is to cooperate as an association to raise money for the campaigns of candidates who will champion Realtor issues. If you haven’t already contributed to RPAC, click here to contribute. Any amount will help.
Michael Dey, Director of Government Affairs