The SC legal residency tax credit and homestead exemption benefits
what is the legal residency tax credit and homestead exemption?
Legal residency tax rate: The law exempts all taxes levied for school operating purposes from your property tax bill on your primary residence.
Homestead Exemption credit: This credit completely exempts the value of $50,000 for all purposes except for school operating purposes (already exempted under the legal residency legislation).
If the value of the home is $70,000 x .04 (the 4% legal residency tax rate) = $2,800 total assessed value.
$2,800 x .285 mills (millage example) = $798 total taxes due before any credits
New school tax credit savings: $70,000 x .04 x 150 mills for school operating= ($420) legal residency discount
Homestead exemption credit: $50,000 x .04 x 135 mills difference in total mills minus school operating mills = ($270) homestead discount
Total tax bill with both credits = $798 - $420 -$270 = $108
Legal residency tax rate on property
To meet the definition of legal residence, you must own and occupy the dwelling as your primary residence.
The County Assessor's office will require that your driver's license be changed to match the property location. This will be done at the Department of Motor Vehicles. www.scdmvonline.com
If you vote, you must change your voting precinct with the Department of Voter Registration. 803-576-2240
If your property is held in trust, the County will request a copy of the Trust to verify that the income beneficiary of the trust occupies the property.
If you are purchasing the property under a Contract of Sale or Bond for Title, your contract will need to be recorded at the county. The county will also likely request a copy of when the electricity was transferred into your name.
If you are divorced, they will require a copy of the Divorce Decree signed by the Judge.
If you are separated, they will require a copy of your Separate Maintenance and Support Agreement signed by the Judge.
If you are active duty military, you must submit a copy of your military ID or current military orders if you are stationed here.
homestead tax exemption program for property
Do you qualify for the homestead exemption?
- You own the property or have a life estate in the property; and
- The property is your primary residence; and
- As of December 31st of the preceding tax year, you were a legal resident of South Carolina for one calendar year; and
- As of December 31st of the preceding tax year, you were:
- 65 years of age or older; or
- declared totally and permanently disabled by the state or federal government agency having authority to make that declaration; or
- legally blind as certified by a licensed ophthalmologist
Then, you should qualify to receive the South Carolina Homestead Exemption on your primary residence.
Surviving Spouse Tax Exemption:
The surviving spouse of a qualified or potentially qualified Homestead recipient may also receive the tax exemption if the deceased spouse would have otherwise qualified for the exemption on December 31st of the preceding tax year.
If your eligibility changes or if you move, you will need to notify the county.
Agricultural Use of Property
What qualifies as Agricultural Use?
If your tract of land is used to grow timber, the tract must be five acres or more. If your tract of land is less than five acres and is contiguous to or under the same management system as a tract of land which does meet the minimum acreage requirement, it is treated as part of the qualifying tract.
If your tract of land is not used to grow timber, the tract must be ten acres or more. If your tract of land is less than ten acres and is contiguous to or under the same management system as a tract of land which does meet the minimum acreage requirement, it is treated as part of the qualifying tract.
Non-timberland tracts not meeting the acreage requirement qualify if the applicant earned at least $1,000 of gross farm income for at least 3 of the last 5 taxable years preceding application.
What is the benefit of applying for Agricultural Use?
Agricultural property is taxed at 4% of it's fair market value for owners/lessees who are individuals or partnerships and corporations which do not have more than 10 shareholders, who are individuals, are not nonresident aliens, with one class of stock. The property is taxed at 6% of fair market value for owners/lessees who are corporations not meeting the criteria above (See SC Code 12-43-220(d)(1)).
When do Roll-Back Taxes apply?
When agricultural property is changed to non-agricultural property, it is subject to additional taxes known as roll-back taxes. The amount of roll-back taxes is equal to the difference between the taxes payable at the 4% agricultural rate versus what the taxes would have been had the property been taxed at the market value appraisal and 6% assessment ratio. The roll-back can be applied to the property for the current tax year (the year of the change in use) and each of the five tax years immediately preceding the year of change in use. (See SC Code 12-43-220(d)(4)).
Information updated as of May 30, 2018. Always check with your county tax assessor for the most updated rules governing your situation or contact us for specific legal advice.