BUSINESS PROPERTY

4 TAX AND EXEMPTIONS

1. TAXATION OF REAL AND PERSONAL PROPERTY
Real property is subject to property taxes. Personal property used in business and
certain personal property used for personal purposes, such as motor vehicles, boats, and
airplanes, are also subject to property taxes. Property taxes are generally assessed and
collected by local governments. The Department assesses and collects some property
taxes and assists in the administration of property taxes by overseeing all property tax
assessments to ensure equitable and uniform assessment throughout South Carolina.

The amount of property tax due is based upon three elements: (1) the property value, (2)
the assessment ratio applicable to the property used to determine assessed value, and (3)
the millage rate imposed by the taxing jurisdictions. Each of these elements is briefly
discussed below.

1. Valuation: For property tax purposes, the value of property is its fair market
value. Fair market value is determined by different methods, depending on the
type of property.

Real property, other than agricultural use property and most property that is
subject to a Fee in Lieu of property taxes, is appraised to determine fair market
value. Real property is appraised countywide on a 5 year cycle and is usually
subject to reassessment (i.e., assessment based on the reappraised value) in the
next year. Any increase in fair market value of any parcel of real property as a
result of a countywide reassessment program is limited to 15% within a 5 year
period. Re-appraisals are triggered by 2 other events: (1) completion of most
types of “improvements” or “additions,” including new construction and
remodeling (see South Carolina Code §12-37-3130(1) for a complete
definition); and, (2) an “assessable transfer of interest,” which encompasses a
broad range of changes as to ownership, or use, or the passage of time as set
forth in South Carolina Code §12-37-3150.

After completion, the fair market value of improvements and additions will be
added to the fair market value of a parcel. After an assessable transfer of interest
occurs, the fair market value of the parcel will be adjusted by appraisal, resulting
in a transfer value. The 15% cap does not apply to (1) the fair market value of
the improvements or additions in the year they are first subject to property tax,
(2) the transfer value in the year the transfer value is first subject to property tax,
and (3) real property valued by the unit valuation method. See South Carolina
Code §§12-43-217 and 12-37-3120 through 12-37-3170. Note, following an
assessable transfer of interest, real property subject to a 6% assessment ratio

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both before and after the transfer may be subject to a partial exemption of its
appraised value. See, South Carolina Code §12-37-3135 discussed in Section 19
below.

Personal property of manufacturers is valued at cost from which a fixed

statutory depreciation percentage is deducted each year until a residual value is
reached. Personal property of merchants is valued at cost from which income tax
depreciation is deducted each year until a residual value is reached. In general,
motor vehicles, boats, and airplanes are valued in accordance with nationally
recognized publications of value (except that the value may not exceed 95% of
the prior year’s value). Discounts are allowed for motor vehicles with high
mileage.

The property of utilities, airlines, railroads, private car lines, motor carriers, and
golf courses is valued using special methods of valuation.

2. Assessment Ratio: Assessment ratios are established in the State Constitution to

ensure stability and differ according to property classification. In general, all
manufacturing property (whether real or personal) and most commercial
personal property is assessed at 10.5%. Commercial real property is assessed at
6%. Personal use motor vehicles are assessed at 6%; motor vehicles that do not
qualify as personal use motor vehicles (i.e., those that are used for business, are
assessed at 10.5 %.) South Carolina Code §12-43-330 provides that property
exempt from taxation is also exempt from assessment.

The valuation is multiplied by the applicable assessment ratio to produce the

“assessed value” of a particular piece of property. Taxes are levied based upon
this assessed value.

New and expanding businesses that invest $2.5 million or more ($1 million or
more in certain instances) can enter into a Fee in Lieu of property taxes
arrangement, which can reduce a 10.5% assessment ratio to 6% for up to 40
years for qualifying property. Very large investments can qualify for a Fee in
Lieu of property taxes arrangement with a 4% assessment ratio for up to 40
years for qualifying property. (See Chapter 6 for more details on Fee in Lieu of
property taxes.)

3. Millage: On an annual basis each taxing jurisdiction determines the number of

mills required so that when that number is multiplied by the total assessed value
of property subject to taxation within its jurisdiction it will raise the money
necessary for it to operate for the next year. The 2010 average millage rate is
296.4 mills. A mill is a unit of monetary value equal to one one-thousandth of a
dollar or $0.001.

Example: If a manufacturer owns a piece of property with a value of $10,000 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 is $1,050
($10,000 x 10.5%). If the taxing jurisdiction decides in a particular year to levy a tax of
297 mills, then the property tax liability of the owner is $312 ($1,050 x .297).
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2. PROPERTY CLASSIFICATION

a. General Information
Classification based on ownership and use of a property is used to determine the
property’s assessment ratio. Classification also determines whether the property will be
valued by a county assessor (for real property), by a county auditor (for personal
property), or by the Department (for specified real and personal property as provided in
South Carolina Code §12-4-540).

South Carolina Regulation 117-1760.1 provides that in classifying businesses for

purposes of property tax assessments, if the company is involved in more than one
operation, the major operation of the company determines the classification.

b. Business Classification
For purposes of assessing property of manufacturers, the Department follows the
classifications set out in Sectors 21, 31, 32, and 33 of the most recent North American
Industry Classification System Manual. However, establishments that publish
newspapers, books, and periodicals that do not have facilities for printing or that do not
actually print their publications are not classified as manufacturers. See South Carolina
Code §12-43-335(B).

For purposes of assessing property of railroads, private carlines, airlines, water, power,
telephone, cable television, sewer, and pipeline companies, the Department follows the
classifications set out in Sectors 22, 51, 424, 481, 482, 483, 485, and 486 (with
exceptions within certain sectors) of the most recent North American Industry
Classification System Manual. See South Carolina Code §12-43-335(C).

For purposes of assessing the property of merchants and related businesses, the
Department follows the classifications set forth in the most recent North American
Industry Classification System Manual, Sectors 22, 23, 42, 44, 45, 48, 51, 56, 71, 81,
453, 481, 483, and 484 (with exceptions within certain sectors). See South Carolina
Code §12-43-335(A).

For purposes of appraising and assessing personal property of businesses and other
entities under the jurisdiction of the county auditor, the county auditor follows the
following classifications as contained in the most recent North American Industry
Classification System Manual: Sector 11 – Subsectors 111 – 115, unless exempt; Sector
51 - Subsector 512; Sector 52 – Subsectors 522 - 525; Sector 53 – Subsectors 531 and
533; Sector 54 – Subsector 541; Sector 55, Subsector 551, unless exempt; Sector 61,
Subsector 611; Sector 62 – Subsectors 621 - 624; Sector 71 – Subsector 712; Sector 72
– Subsector 721; and Sector 81 – Subsectors 813 - 814, unless exempt. See South
Carolina Code §12-39-70.

If a business is involved in more than one operation, the major operation determines its
classification for purposes of property tax assessments.

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3. ASSESSMENT RATIOS AND VALUATION

a. Manufacturers’ and Utilities’ Real Property

South Carolina Code §12-43-220(a) provides that real property owned by, or leased to,
manufacturers and utilities and used by the manufacturer or utility in the conduct of its
business is taxed on an assessment of 10.5% of the fair market value of the property,
unless otherwise provided. South Carolina Regulation 117-1700.3 defines “utilities” to
include water companies, power companies, electric cooperatives, and telephone
companies. The Department also considers sewer companies and cable television
companies to be utilities.

Assessment Ratio. Depending on use, the real property owned by a manufacturer may
qualify for a 6% assessment ratio rather than a 10.5% assessment ratio. The qualifying
uses are discussed below.

 Real property owned by, or leased to, a manufacturer and used primarily for
research and development is not considered used by a manufacturer in the
conduct of its manufacturing business for purposes of classification of property.
The phrase “research and development” means basic and applied research in the
sciences and engineering and the design and development of prototypes and
processes.

 Real property owned by, or leased to, a manufacturer and used primarily as an
office building is not considered used by a manufacturer in the conduct of the
business of the manufacturer for purposes of classification of property if the
office building is not located on the premises of, or contiguous to, the plant site
of the manufacturer.

 A public road and railway tracks in which the manufacturer held fee simple does
not defeat contiguity. When a manufacturer’s manufacturing facility and its
office building is separated by the road and tracks, the office building does not
qualify for the special 6% assessment ratio. Sonoco Products Co. v. South
Carolina Department of Revenue, 378 S.C. 385 (2008).

 Real property owned by, or leased to, a manufacturer and used primarily for
warehousing and wholesale distribution is not considered used by a
manufacturer in its manufacturing business for purposes of classification of
property. Real property subject to this special provision must not be physically
attached to the manufacturing plant unless the warehousing and wholesale area
is separated from the manufacturing area by a permanent wall. This provision is
effective January 1, 2011.

Valuation. The fair market value of a manufacturer’s real property, other than
agricultural use real property and potentially property that is subject to a Fee in Lieu of
property taxes, is determined by appraisal as discussed at the beginning of this chapter.

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All real and personal property of a utility is valued using a unit valuation method to
value the utility operations as a whole. See South Carolina Code §§12-37-930 and
12-4-540(B).

b. Manufacturers’ Machinery and Equipment

Assessment Ratio. South Carolina Code §12-43-220(a) provides that personal property
owned by, or leased to, a manufacturer is taxed on an assessment of 10.5%.

Valuation. South Carolina Code §12-37-930 provides that the fair market value of
manufacturers’ machinery and equipment used in the conduct of the manufacturing
business is determined by reducing the original cost by an annual depreciation
allowance. The depreciation allowances range from 6% to 30% per year. South Carolina
Code §12-37-935 provides that the maximum depreciation allowed for manufacturer’s
machinery and equipment is 90% of original cost. Special depreciation rates are
applicable to Class 100 or better clean rooms and to machinery and equipment used
directly in the manufacturing process by a “life sciences facility” or a “renewable
energy manufacturing facility” as defined in South Carolina Code §12-37-930.

Special Reporting Rule for Idle Property Not Under a Fee Agreement. Personal
property of a manufacturer located at the manufacturer’s facility does not have to be
returned for property tax purposes if the facility has not been operational for one fiscal
year and the personal property has not been used in the operations for one fiscal year. A
return is not required for the property until it becomes operational in a manufacturing
process or until it has not been returned for 4 years, whichever occurs first. The
manufacturer must continue to list the personal property annually with a designation
that the personal property is not subject to tax. South Carolina Code §12-37-900.

c. Merchants’ Business Personal Property

Assessment Ratio. In general, South Carolina Code §12-43-220(f) provides that the
personal property of a merchant is assessed at 10.5%.

Valuation. South Carolina Regulation 117-1840.1 provides that the fair market value of
merchants’ personal property is equal to its depreciated basis for income tax purposes
(but not less than 10% of its original cost).

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d. Motor Vehicles and Watercraft

Assessment Ratio. In general, South Carolina Code §12-43-220(f) provides that the
assessment ratio of tangible personal property is 10.5%. Exceptions are: (1) the
assessment ratio for personal use motor vehicles is 6%, and (2) the assessment ratio for
commercial fishing boats, commercial tugboats, and pilot boats is 5%.

Valuation. South Carolina Code §12-37-930 requires motor vehicles and watercraft to
be valued based on nationally recognized publications (but the value cannot exceed
more than 95% of the prior year’s value).

Watercraft and motors that have an assessed value of $50 or less are exempt from
property taxes under South Carolina Code §12-37-220(B)(38). Watercraft trailers are
exempt from property taxes under South Carolina Code §12-37-220(B)(40). The
governing body of a county, by ordinance, may exempt from property tax 42.75% of the
fair market value of a watercraft and it’s motor. The motor need not be attached to the
watercraft to qualify. South Carolina Code §12-37-220(B)(38).

Boats and boat motors that are not currently taxed in South Carolina and that are not
used exclusively in interstate commerce become taxable if they are present in South
Carolina for 60 consecutive days or 90 days in the aggregate in a property tax year. In
lieu of the above rule, the local governing body may, by ordinance, replace the 60/90
day provision with one of the following:

1. The boat or boat motor will be considered taxable if the boat or motor is in
South Carolina for an aggregate of 180 days in a property tax year. The number
of consecutive days that the boat or motor is in South Carolina is disregarded if
the county chooses this option; or,

2. The boat or boat motor will be considered taxable if the boat or boat motor is
present in South Carolina for an aggregate of 90 days in a property tax year. The
number of consecutive days that the boat or motor is in South Carolina is
disregarded if the county chooses this option.

For boats used in interstate commerce and that have a tax situs in South Carolina and in
at least one other state, the value is computed by multiplying the fair market value by a
fraction (i.e., the number of days the boat was present in South Carolina divided by
365.) The boat must be physically present for an aggregate of 30 days in South Carolina
to be subject to property taxes in this State. South Carolina Code §12-37-714.

e. General Aviation Aircraft

Assessment Ratio. Pursuant to South Carolina Code §12-43-220(f), aircraft are assessed
at 10.5%. South Carolina Code §12-43-360 allows the governing body of a county, by

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ordinance, to reduce the assessment ratio of general aviation aircraft subject to property
tax in the county to not less than 4% of the fair market value. The ordinance must be
applied uniformly to all general aviation aircraft subject to property tax in the county.

Valuation. South Carolina Code §12-37-930 requires aircraft to be valued based on

nationally recognized publications (but the value cannot exceed more than 95% of the
prior year’s value).

f. Golf Courses
Assessment Ratio. Pursuant to South Carolina Code §12-43-220(e) golf courses are
assessed at 6%.

Valuation. Golf courses are appraised to determine fair market value. South Carolina
Code §12-43-365 provides that the valuation of golf course real property does not
include the value of tangible and intangible personal property, or any income or expense
derived from such property, whether directly or indirectly. Additional rules are provided
if the capitalized income approach is used to determine fair market value. Real property
is generally subject to the 15% cap as discussed at the beginning of this chapter.

g. All Other Property

Assessment Ratio. South Carolina Code §12-43-220(e) provides that all other real
property not otherwise provided for is assessed at 6% of its fair market value. South
Carolina Code §12-43-220(f) provides that all other tangible personal property is
assessed at 10.5% of its fair market value.

Valuation. The fair market value of real property is generally determined by appraisal as
discussed at the beginning of this chapter. South Carolina Regulation 117-1840.2
provides that all personal property that is under county jurisdiction and is not covered
by assessment guides furnished by the Department for the assessment of vehicles shall
be appraised by the county auditor in the same manner as business personal property
under the jurisdiction of the Department as provided for in South Carolina Regulation
117-1840.1.

h. Motor Carriers
South Carolina Code §§12-37-2810 through 12-37-2880 provide that the Department
will annually assess, equalize, and apportion for property tax purposes the valuation of
all motor vehicles of motor carriers who are South Carolina based International
Registration Plan registrants or who own or lease real property within South Carolina
used directly in the transportation of freight. Motor carriers meeting the definition of
“motor carrier” in South Carolina Code §12-37-2810(A) will be exempt from all other
property taxes on their motor vehicles.

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Valuation. The fair market value of motor carriers’ vehicles taxable in South Carolina is
determined by depreciating the gross capitalized cost of each motor vehicle by the
percentage set forth in the statute. The vehicle may not be depreciated below 10% of its
gross capitalized cost. The resulting value is multiplied by the ratio of a carrier’s total
mileage operated within this state during the preceding calendar year to the carrier’s
total mileage within and without this state during the same preceding calendar year
times the fair market value of all motor vehicles of the carrier.

Assessment Ratio. This amount (fair market value of vehicles taxable in South
Carolina) is then multiplied by a 9.5% assessment ratio to arrive at the assessed value of
motor vehicles taxable in South Carolina.

Millage. Once the assessed value has been determined, it is multiplied by the average
millage for all purposes statewide for the preceding year. The result is the amount of
property tax due.

Exceptions. Trailers and semitrailers used by motor carriers are subject to a one-time
$87 fee in lieu of all property taxes and registration requirements after the initial
registration. Trailers and semitrailers do not include pole trailers.

4. MANUFACTURING EXEMPTIONS
Article X, §3 of the South Carolina Constitution and South Carolina Code
§12-37-220(A)(7) provide for a 5 year exemption from county property taxes (the
exemption does not apply to school or municipal taxes) for all new manufacturing
establishments and all additions costing $50,000 or more to existing manufacturing
facilities located in South Carolina. The exemption applies to land, buildings, and
additional machinery and equipment installed in the facility. Further, Article X, §3 of
the South Carolina Constitution provides that a municipality may, by ordinance, also
exempt this property from municipal property taxes for not more than 5 years. The
timely filing of Form PT-300, “Property Return,” and appropriate schedules with the
Department is deemed to be the application for this exemption.

Additionally, South Carolina Code §12-37-220(C) provides that the exemption may be
extended to an unrelated purchaser for the time remaining in the seller’s exemption
period. To qualify, South Carolina Revenue Ruling #04-14 provides that the purchaser
must (1) acquire the facility in an arms-length transaction, (2) preserve the existing
facility and existing number of jobs, and (3) obtain the approval of the governing body
of the county. If the qualifying unrelated purchaser meets the above three requirements
and makes additions to the new or existing facility costing $50,000 or more, then the
purchaser may qualify for a 5 year exemption from county property taxes. Since this
exemption requires approval from the local county governing body, the purchaser must
timely submit an application for this exemption to the Department on Form PT-444,
“Five Year Exemption Extended to Unrelated Purchaser.”

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Opinions concerning the exemption in South Carolina Code §12-37-220(A)(7) include

the following:

1. South Carolina Attorney General Opinion #3712 (1974) determined that for
purposes of the $50,000 addition requirement the cost of the addition must be
$50,000 to one manufacturing plant rather than an aggregate expenditure for all
manufacturing plants of a single taxpayer located in one county.

2. South Carolina Private Letter Ruling #87-11 reviewed whether a new business
purchasing an existing facility from a company that had ceased operations at the
facility met the requirement to be a new manufacturing establishment or was a
continuation of the previous business. The following elements were considered
relevant: (1) change in ownership, (2) change in product, (3) substantial
investment of new capital, (4) cessation of former business, and (5) change in
product market. Based on the facts in the advisory opinion, the plant met these
elements to a degree sufficient to allow the exemption as a new manufacturing
establishment.

3. South Carolina Revenue Ruling #89-3 concluded that the exemption for
additions to real property improvements of existing manufacturers is allowed to
the extent that the real property improvements increase the total real property
improvements appraisal.

5. RESEARCH AND DEVELOPMENT EXEMPTIONS

South Carolina Code §12-37-220(B)(34) provides a 5 year exemption from county
property taxes (the exemption does not apply to school or municipal taxes) for the
facilities of all new enterprises (and all additions valued at $50,000 or more to existing
facilities of enterprises) engaged in research and development activities. Further, South
Carolina Code §12-37-220(B)(39) provides that the governing body of a municipality
may, by ordinance, exempt from municipal property taxes for not more than 5 years
property that is located in the municipality and that receives the exemption from county
property taxes allowed under South Carolina Code §12-37-220(B)(34). The timely
filing of Form PT-300, “Property Return,” and appropriate schedules with the
Department is deemed to be the application for this exemption. (See Sales and Use Tax
Specific Provisions, Chapter 8, Section 7, which addresses a sales or use tax exemption
for machines used in research and development pursuant to South Carolina Code
§12-36-2120(56).)

Facilities of enterprises engaged in research and development activities are defined in

South Carolina Code §12-37-220(B)(34) as facilities devoted directly and primarily to
research and development in the experimental or laboratory sense for new products,
new uses for existing products, or for improving existing products. The exemption does
not include facilities used in connection with efficiency surveys, management studies,
consumer surveys, economic surveys, advertising, promotion, or research in connection

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with literary, historical, or similar projects. Additions include machinery and equipment
installed in an existing manufacturing or research and development facility. The facility
or its addition must be devoted primarily to research and development.

Additionally, South Carolina Code §12-37-220(C) provides that the exemption may be
extended to an unrelated purchaser for the time remaining in the seller’s exemption
period. To qualify, South Carolina Revenue Ruling #04-14 provides that the purchaser
must (1) acquire the facility in an arms-length transaction, (2) preserve the existing
facility and existing number of jobs, and (3) obtain the approval of the governing body
of the county. If the qualifying unrelated purchaser meets the above three requirements
and makes additions to the new or existing facility costing $50,000 or more, then the
purchaser may qualify for a 5 year exemption from county property taxes. Since this
exemption requires approval from the local county governing body, the purchaser must
timely submit an application for this exemption to the Department on Form PT-444,
“Five Year Exemption Extended to Unrelated Purchaser.”

6. CORPORATE HEADQUARTERS, CORPORATE

OFFICE FACILITY, AND DISTRIBUTION FACILITY
EXEMPTIONS
South Carolina Code §12-37-220(B)(32) provides a 5 year exemption from county
property taxes (the exemption does not apply to school and municipal property taxes)
for new corporate headquarters, corporate office facilities, distribution facilities, and all
additions to existing corporate headquarters, corporate office facilities, or distribution
facilities if:

1. The cost of the new construction or addition is $50,000 or more, and

2. 75 or more new full-time jobs, or 150 or more substantially equivalent jobs, are
created in South Carolina.

Further, South Carolina Code §12-37-220(B)(39) provides that the governing body of a
municipality may, by ordinance, exempt from municipal property taxes for not more
than 5 years property that is located in the municipality and that receives the exemption
from county property taxes allowed under South Carolina Code §12-37-220(B)(32).
The timely filing of Form PT-300, “Property Return,” and appropriate schedules with
the Department is deemed to be the application for this exemption. (See Chapter 2,
Business Income Tax, Section 16, for a discussion of the income tax credit for corporate
headquarters.)

Additionally, South Carolina Code §12-37-220(C) provides that the exemption may be
extended to an unrelated purchaser for the time remaining in the seller’s exemption
period. To qualify, South Carolina Revenue Ruling #04-14 provides that the purchaser
must (1) acquire the facility in an arms-length transaction, (2) preserve the existing
facility and existing number of jobs, and (3) obtain the approval of the governing body
of the county. If the qualifying unrelated purchaser meets the above three requirements

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and (1) makes additions to the new or existing facility costing $50,000 or more and (2)
creates an additional 75 new full time jobs or 150 substantially equivalent jobs at the
corporate headquarters, corporate office facility or distribution facility, then the
purchaser may qualify for a 5 year exemption from county property taxes. Since this
exemption requires approval from the local county governing body, the purchaser must
timely submit an application for this exemption with the Department on Form PT-444,
“Five Year Exemption Extended to Unrelated Purchaser.”

A number of terms are defined in South Carolina Code §12-37-220(B)(32) for purposes
of this exemption. Listed below are some of the defined terms:

 “Corporate headquarters” means the location where corporate staff members or

employees are domiciled and employed and where the majority of the
company’s financial, personnel, legal, planning, or other business functions are
handled either on a regional or national basis; it must be the sole such corporate
headquarters within the region or nation.

 “Region” or “regional” means a geographic area comprised of either (a) at least

5 states, including South Carolina, or (b) 2 or more states, including South
Carolina, if the entire business operations of the corporation are performed
within fewer than 5 states.

 “New job” means any job created by an employer in South Carolina at the time
a new facility or an expansion is initially staffed, but does not include a job
created when an employee is shifted from an existing South Carolina location to
work in a new or expanded facility.

 “Full-time” means a job requiring a minimum of 35 hours of an employee’s

time a week for the entire normal year of company operations or a job
requiring a minimum of 35 hours of an employee’s time for a week for a
year in which the employee was initially hired for or transferred to the South
Carolina corporate headquarters, corporate office facility, or distribution
facility and worked at a rented facility pending construction of a corporate
headquarters, corporate office facility, or distribution facility.

 “Substantially equivalent” means a job requiring a minimum of 20 hours of

an employee’s time a week for the entire normal year of company operations
or a job requiring a minimum of 20 hours of an employee’s time for a week
for a year in which the employee was initially hired for or transferred to the
South Carolina corporate headquarters, corporate office facility, or
distribution facility and worked at a rented facility pending construction of a
corporate headquarters, corporate office facility, or distribution facility.

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 “Corporate Office Facility” means the location where corporate managerial,

professional, technical, and administrative personnel are domiciled and
employed, and where corporate financial, personnel, legal, technical, support
services, and other business functions are handled. Support services include, but
are not limited to, claims processing, data entry, word processing, sales order
processing, and telemarketing.

 “Distribution facility” means an establishment where shipments of tangible

personal property are processed for delivery to customers. The term does not
include an establishment where retail sales of tangible personal property are
made to retail customers on more than 12 days a year except for a facility which
processes customer sales orders by mail, telephone, or electronic means, if the
facility also processes shipments of tangible personal property to customers and
if at least 75% of the dollar amount of goods sold through the facility are sold to
customers outside of South Carolina. Retail sales made inside the facility to
employees working at the facility are not considered for purposes of the 12 day
and 75% limitation.

South Carolina Private Letter Ruling #89-19 dealt with several questions concerning the
property tax exemption and the income tax credit for a corporate headquarters for a
taxpayer under a unique set of facts. One question concerned what was an “addition to
an existing corporate headquarters.” In this instance, the taxpayer constructed two
buildings at their South Carolina location. For purposes of the employment requirement,
it was necessary to determine whether the additions should be viewed as one expansion
or two. The Department concluded that since the phrase “addition to an existing
corporate headquarters” may mean the building of one building or many buildings, a
reasonable interpretation is to look to the plan of expansion. Since the plan of expansion
in question included the current construction of both buildings, then the buildings
should be construed as one addition; therefore, requiring the taxpayer to fulfill the
employment provisions once.

Another question addressed in South Carolina Private Letter Ruling #89-19 was
whether the positions created had to be placed in the new buildings. The Department
concluded that the positions need not be placed in the new buildings; however, they
must be employed in the South Carolina headquarters complex. Early staffing for the
purpose of training was acceptable if the employee would be placed in the corporate
headquarters during the construction of the expansion or immediately after its
completion.

7. TEXTILE REVITALIZATION CREDITS

a. General Provisions
The South Carolina Textile Communities Revitalization Act, contained in Title 12,
Chapter 65, provides a credit for the renovation, rehabilitation, and redevelopment of

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abandoned textile mill sites in South Carolina. South Carolina Code §12-65-30 allows a
taxpayer who rehabilitates an abandoned textile mill site to choose one of the following
tax credits:

1. A credit against real property taxes (“property tax credit”) equal to 25% of the
eligible rehabilitation expenses made to the site multiplied by the local taxing
entity ratio for each local taxing entity consenting to the credit or

2. A credit against income tax, license tax, or both or a credit against bank or
insurance premium taxes (“income/bank/license/insurance premium tax credit”)
equal to 25% of eligible rehabilitation expenses.

A “Notice of Intent to Rehabilitate” must be filed by the taxpayer before incurring its
first rehabilitation expenses at the textile mill site. The Notice must be filed with the
municipality (or county if the site is located in an unincorporated area) for a taxpayer
choosing the property tax credit. Rehabilitation expenses incurred before the Notice is
provided generally will not qualify for the credit.

The Notice is a letter submitted by the taxpayer indicating:

 the taxpayer intends to rehabilitate the site

 the location of the site

 the amount of acreage involved with the site

 the estimated expenses to be incurred

 which buildings on the site are to be renovate or demolished and

 whether new construction is to be involved at the site.

b. Property Tax Credit

To obtain the property tax credit, the municipality or county must, by resolution,
determine the eligibility of the textile mill site and the proposed rehabilitation expenses.
A positive majority vote of the local governing body must approve the rehabilitation
and the expenses. Final approval must be by public hearing and ordinance.

At least 45 days before holding the public hearing, the governing body of the
municipality or county must give notice to all affected local taxing entities where the
textile mill site is located of its intention to grant the property tax credit and the amount
of estimated credit based on the amount of estimated rehabilitation expenses. If the local
taxing entity does not file an objection, it is deemed to have consented to the credit. A
taxpayer is not allowed the property tax credit if it owned the textile mill site

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immediately prior to its abandonment and the site was operational at that time. Further,
a taxpayer is not eligible to claim a credit if the facility previously received textile mill
credits.

This credit amount is based upon actual or estimated expenses as follows:

1. The credit is 25% of the actual rehabilitation expenses if the actual expenses
incurred in rehabilitating the site are 80% - 125% of the estimated rehabilitation
expenses listed in the Notice.

2. The credit is 25% of 125% of the estimated rehabilitation expenses if the actual
rehabilitation expenses exceed 125% of the estimated expenses listed in the
Notice.

3. No credit is allowed if the actual rehabilitation expenses are below 80% of the
estimated expenses.

The amount of allowable expenses is multiplied by the local taxing entity ratio of each
local taxing entity that has consented to the credit to determine the amount that may
offset property taxes. The ordinance shall allow the credit to be taken against up to 75%
of the real property taxes due on the textile mill site each year for up to 8 years. The
credit may be claimed for each applicable phase or portion of the site beginning for the
property tax year the applicable phase or portion is first placed in service. An unused
credit may be carried forward for 8 years.

c. Income or License Tax Credit

See Chapter 2, “Business Income Tax”, Section 32, for a summary of the textile
revitalization income/bank/license/insurance premium tax credit.

d. Definitions
South Carolina Code §12-65-20 contains a list of definitions of terms used in the Act.
Some of the defined terms are:

1. “Textile mill” - a facility or facilities that were initially used for textile
manufacturing, dying, or finishing operations and for ancillary uses to those
operations.

2. “Textile mill site” - the textile mill together with the land and other
improvements on it which were used directly for textile manufacturing
operations or ancillary uses. However, the area of the site is limited to the land
located within the boundaries where the textile manufacturing, dying, or
finishing facility structure is located and does not include land located outside
the boundaries of the structure or devoted to ancillary uses.

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3. “Ancillary uses” - uses related to the textile manufacturing, dying, or finishing

operations on a textile mill site consisting of sales, distribution, storage, water
runoff, wastewater treatment and detention, pollution control, landfill, personnel
offices, security offices, employee parking, dining and recreation areas, and
internal roadways or driveways directly associated with such uses.

4. “Abandoned” - at least 80% of the textile mill has been continuously closed to
business or otherwise nonoperational as a textile mill for at least one year
immediately preceding the date the taxpayer files a “Notice of Intent to
Rehabilitate.” A textile mill that qualifies as abandoned may be subdivided into
separate parcels, and those parcels may be owned by the same taxpayer or
different taxpayers, and each parcel is deemed to be a textile mill site for
purposes of determining whether each subdivided parcel has been abandoned.

5. “Rehabilitation expenses” - expenses or capital expenditures incurred in the

rehabilitation, renovation, or redevelopment of the textile mill site, including
demolition of existing buildings, environmental remediation, site improvements
and the construction of new buildings and other improvements on the site, but
excluding the cost of acquiring the site or the cost of personal property located at
the site. For expenses to qualify for the credit, the textile mill and buildings on
the site must be either renovated or demolished.

6. “Placed in service” - the date the textile mill site is completed and ready for its
intended use. If the site is completed and ready for use in phases or portions,
each phase or portion is considered placed in service when it is completed and
ready for its intended use.

7. “Local taxing entities” - a county, municipality, school district, special purpose

district, and any other entity or district with the power to levy ad valorem
property taxes against the site.

8. “Local taxing entity ratio” - that percentage computed by dividing the millage
rate of each local taxing entity by the total millage rate for the site.

CAUTION: Other rules may apply to a site located on the Catawba River near
Interstate 77, and transitional rules as discussed below may apply to certain sites.

e. Certification Procedures
South Carolina Code §12-65-60 provides a procedure which allows a taxpayer to apply
to the governing body of the municipality or county in which the textile mill site is
located for certification of the site. The certification can be done by either ordinance or
binding resolution. The certification must include certain findings. A taxpayer who
receives this certification is allowed to conclusively rely on the certification in
determining the credit allowed; however, the taxpayer must include a copy of the
certification on his first return where the credit is claimed.

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f. Transitional Rules
South Carolina Code §12-65-50 has been added to provide transitional rules addressing
whether the new provisions for the textile facility revitalization credit (Chapter 65, Title
12) apply to the site, or whether the previous provisions for the textile facility
revitalization credit (Chapter 32, Title 6) apply to the site. In particular, the transitional
rules address textile mill sites (1) that were fully or partially placed in service on or after
January 1, 2008; (2) that were fully placed in service prior December 31, 2007; and (3)
that were acquired before December 31, 2007 but a portion of the site has been placed
in service on or after December 31, 2007.

8. RETAIL FACILITIES REVITALIZATION CREDITS

a. General Provisions
The South Carolina Retail Facilities Revitalization Act, contained in Title 6, Chapter
34, provides a property tax credit or an income tax credit for the renovation,
improvement, and redevelopment of abandoned retail facility sites in South Carolina.

South Carolina Code §6-34-40 allows a taxpayer who improves, renovates, or

redevelops an eligible site to elect one of the following credits:

1. A “property tax credit” equal to 25% of the rehabilitation expenses made to the
eligible site times the local taxing entity ratio for each local taxing entity
consenting to the credit, up to 75% of the real property taxes due on the eligible
site each year or

2. An “income tax credit” equal to 10% of the rehabilitation expenses.

The taxpayer elects whether to claim the property tax credit or the income tax credit. To
elect the property tax credit, the taxpayer must provide written notification to the
Department prior to the date the eligible site is placed in service. If the taxpayer does
not affirmatively make the property tax credit election timely in writing before the date
the site is placed in service or does not obtain the required county approvals in South
Carolina Code §6-34-40(B), then the taxpayer is deemed to have elected the income tax
credit. There is no notification process for the income tax credit. There is no formal
procedure to elect the income tax credit; it is simply claimed on the income tax return.
For questions regarding the property tax credit election notification, contact the South
Carolina Department of Revenue at 803-898-5557.

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b. Property Tax Credit

If a taxpayer elects the property tax credit provided in South Carolina Code
§6-34-40(B), the municipality (or county if the site is located in an unincorporated area)
must determine the eligibility of the site and the proposed project. A majority vote of
the local governing body must approve the project by resolution, and the determinations
and the final approval must be made by public hearing and ordinance.

No later than 45 days before holding the public hearing, the governing body of the
municipality or county must give notice to all local taxing entities where the eligible site
is located of its intention to grant the property tax credit. If the local taxing entity does
not file an objection, it is deemed to have consented to the credit if the actual tax credit
does not exceed the credit stated in the public hearing notice.

The ordinance shall allow the credit to be taken against up to 75% of the real property
taxes due on the eligible site each year for up to 8 years. The property tax credit vests in
the taxpayer in the year in which the eligible site is placed in service. An unused credit
may be carried forward up to 8 years.

c. Income Tax Credit

See Chapter 2, “Business Income Tax,” Section 33, for a summary of the retail facility
revitalization income tax credit.

d. Definitions
South Carolina Code §6-34-30 contains the definitions for the following terms used in
the Act:

1. “Eligible site” - a shopping center, mall, or free standing site that has been
abandoned whose primary use was as a retail facility with at least one tenant or
occupant located in a 40,000 square foot or larger building or structure.
However, for purposes of the property tax credit, the governing body of a county
or municipality where the site is located may, by resolution, reduce the 40,000
square foot eligibility requirement by not more than 15,000 square feet.

2. “Abandoned” - at least 80% of the eligible site’s facilities have been

continuously closed to business or nonoperational for at least one year
immediately prior to the time the determination is to be made. However, during
the abandonment, the eligible site may serve as a wholesale facility for no more
than one year. The eligible site’s facilities only include the site’s building or
structure.

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3. “Rehabilitation expenses” – “the expenses incurred in the rehabilitation of the

eligible site, excluding the cost of acquiring the eligible site or the cost of
personal property maintained at the eligible site.”

4. “Placed in service” - the date the eligible site is suitable for occupancy for the
purposes intended.

5. “Local taxing entity ratio” - the “percentage computed by dividing the millage
rate of each local taxing entity by the total millage rate for the eligible site.”

6. “Local taxing entity” – “a county, municipality, school district, special purpose

district, and any other entity or district with the power to levy ad valorem
property taxes against the eligible site.”

e. Transfer of Credit
The owner of the eligible site may transfer, devise, or distribute any unused credit to the
tenant of the eligible site, provided the Department receives written notification of, and
approves the transfer, devise, or distribution.

f. Repeal Date
The South Carolina Retail Facilities Revitalization Act is repealed on July 1, 2016.

9. FIRE SPRINKLER SYSTEM CREDIT

South Carolina Code §12-6-3622 provides that a local taxing entity may allow a
property tax credit to a taxpayer who installs a new or existing fire sprinkler system in a
new or existing commercial or residential structure if the system is not required by law,
regulation, or code. The property tax credit is equal to 25% of the direct expenses
incurred in connection with the system, but does not include any fee charged by a
utility. The credit is claimed against real property taxes levied by a local taxing entity.
The taxpayer may also claim an income tax credit equal to the amount of the property
tax credit allowed by the local taxing entity. The term “fire sprinkler system” has the
same meaning as provided in South Carolina Code §40-10-20.

The owner of the structure may transfer, devise, or distribute any unused credit to the
tenant of the eligible site. To be effectual, the local taxing entity must receive written
notification. The property tax credit is claimed on Form TC-52C, “Sprinkler System
Credit Claim and Certification Form,” submitted with the payment of real property
taxes to the local taxing entity.

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See below for a discussion of the fire sprinkler system equipment exemption and see
Chapter 2, “Business Income Tax,” for a discussion of the income tax credit allowed for
the installation of a fire sprinkler system.

10. REHABILITATED HISTORIC PROPERTY OR LOW AND

MODERATE INCOME RENTAL PROPERTY -
PREFERENTIAL VALUATION
South Carolina Code §§4-9-195 and 5-21-140 provide that the governing body of a
county or municipality may grant by ordinance special property tax assessments to real
property qualifying as “rehabilitated historic property” or as “low and moderate income
rental property” as described below.

a. Rehabilitated Historic Property

Upon preliminary certification by the taxing entity, owner occupied rehabilitated
historic property is assessed for two years based on a special valuation equal to the fair
market value of the property at the time of preliminary certification. Rehabilitated
historic property is eligible for preliminary certification if (1) the owner of the property
applies for and is granted historic designation by the governing body of the taxing entity
and (2) the proposed rehabilitation receives approval of rehabilitation work from the
appropriate reviewing authority. The appropriate reviewing authority is either: (1) the
county board of architectural review for counties having such a board operating under
South Carolina Code §6-29-870, (2) another qualified entity with historic preservation
expertise designated by a county that does not have a board of architectural review or,
(3) the South Carolina Department of Archives and History for counties not having a
board of architectural review or designated entity. In order to be granted a historic
designation, the property must meet certain conditions related to its age and/or location.
The taxing entity may require that an owner apply for preliminary certification before
any work begins.

Upon completion of the project, the property must receive final certification from the
taxing entity to continue to obtain its special valuation. To receive final certification the
property must meet the following conditions: (1) the owner of the property must apply
for and be granted historical designation by the governing body of the taxing entity
based on the criteria established for a “historic designation,” (2) the completed
rehabilitation must receive approval of the rehabilitation work from the appropriate
reviewing authority, and (3) the “minimum expenditures for rehabilitation” must have
been incurred and paid. Once the final certification has occurred, the property must be
assessed based on a special valuation equal to the fair market value at the time of
preliminary certification or final certification, whichever occurs first. The property is
assessed at that value for 20 years or whatever lesser period the county establishes in its
ordinance or until a disqualifying event occurs. The disqualifying events are set forth in
South Carolina Code §4-9-195(E).

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b. Low and Moderate Income Rental Property

Upon certification by the governing body of the taxing entity, low and moderate income
rental property is assessed based on a special valuation equal to the fair market value of
the property at the time of certification. The requirements for qualifying as low and
moderate income rental property are set forth in the South Carolina Code §4-9-195(C).
Once the certification has occurred, the property must be assessed based on the special
valuation for 20 years or whatever lesser period the county establishes in its ordinance
or until a disqualifying event occurs. The disqualifying events are set forth in South
Carolina Code §4-9-195(E).

c. General Information
If an application for preliminary or final certification is filed by May 1st or approved by
August 1st, the special assessment is effective for that year. Otherwise, it is effective
beginning the following year. Once the governing body has granted this special
property tax assessment, the owner of the property must apply to the county auditor for
the special assessment.

See South Carolina Property Tax, published on the Department’s website at

[Link]/publications, for more information.

11. EXEMPTIONS FOR INVENTORY AND INTANGIBLES

South Carolina Code §§12-37-220(A)(6) and (B)(30) exempt all inventories from
property taxes. Further, there is no local tax on inventories. South Carolina Code
§12-4-720(A)(3) provides that no application is required to exempt inventories.

South Carolina Revenue Ruling #91-7 addressed the definition of “inventory” and
concluded (1) merchandise purchased for resale is inventory for purposes of South
Carolina Code §12-37-450 (the reimbursement to counties and municipalities for
revenues lost as a result of the inventory exemption), (2) the purpose for which
merchandise was bought and held governs in determining whether it is inventory, not
the fact that it may subsequently be resold, and (3) equipment which is rented out by
rental businesses and materials and supplies used in a business are examples of property
which are not inventory and; therefore, are not exempt from property taxation under
South Carolina Code §12-37-220(B)(30). Generally, items are classified as inventory if
they are inventory for South Carolina income tax purposes, which is based upon federal
income taxes.

South Carolina Code §12-37-220(A)(10) exempts “intangible personal property” from

property taxes. Further, there is no local tax on intangible personal property. South
Carolina Code §12-4-720(A)(3) provides that no application is required to exempt
intangible personal property.

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12. EXEMPTION FOR PERSONAL PROPERTY IN TRANSIT

South Carolina Code §12-37-220(B)(17) exempts from property taxation personal
property in transit with “no situs” status as defined in South Carolina Code
§12-37-1110. Personal property in transit is personal property, goods, wares, and
merchandise that: (1) is moving in interstate commerce, or (2) was consigned to a
warehouse (public or private) within this state from without this state for storage in
transit to a final destination outside of this state, whether specified when transportation
began or afterward. This property is subject to certain record keeping requirements. No
application for this exemption is necessary.

13. POLLUTION CONTROL EXEMPTION

South Carolina Code §12-37-220(A)(8) exempts from property taxation all facilities or
equipment of industrial plants and used in the conduct of their business which are
designed for the elimination, mitigation, prevention, treatment, abatement, or control of
internal or external water, air, or noise pollution required by the state or federal
government.

For equipment that serves a dual purpose of production and pollution control, the value
eligible for the property exemption is the difference in cost between this equipment and
equipment of similar production capacity or capability without the ability to control
pollution.

For purposes of this exemption, 20% of the cost of any piece of machinery and
equipment placed in service in a greige mill qualifies as internal air and noise pollution
control property and is exempt from property taxes. “Greige mill” means all textile
processes from opening through fabric formation before dyeing and finishing.

At the request of the Department, the Department of Health and Environmental Control
(“DHEC”) investigates the property of any manufacturer or company eligible for the
exemption to determine the portion of the property that qualifies as pollution control
property. Upon investigation of the property, DHEC furnishes the Department with a
detailed listing of the property that qualifies as pollution control property.

South Carolina Code §12-4-720(A)(2) provides that application for this exemption must
be filed with the Department before the first penalty date for the payment of property
taxes.

14. ENVIRONMENTAL CLEANUP EXEMPTION

Subject to approval by the governing body by resolution, South Carolina Code §12-37-
220(B)(44) provides a 5 year exemption from county property taxes (the exemption
does not apply to school and municipal property taxes) for property and improvements
subject to a nonresponsible party voluntary cleanup contract for which a certificate of

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completion has been issued by the South Carolina Department of Health and
Environmental Control pursuant to Article 7, Chapter 56, Title 44 (The Brownfields
Voluntary Cleanup Program). The exemption applies beginning with the taxable year in
which a certificate of completion is issued.

15. FIRE SPRINKLER SYSTEM EXEMPTION

South Carolina Code §12-37-220(B) provides an exemption for all fire sprinkler system
equipment that is installed on a commercial or residential structure when the installation
is not required by law, regulation, or code. The value of such equipment is exempt until
there is an “assessable transfer of interest.”

See Section 1 above for a brief discussion of assessable transfer of interest. Also, see
above for a discussion of the fire sprinkler system credit and Chapter 2, “Business
Income Tax,” for a discussion of the income tax credit allowed for the installation of a
fire sprinkler system.

16. OTHER PARTICULAR BUSINESS EXEMPTIONS

Some or all of the property of the following businesses is exempt from property taxes:

 South Carolina Code §§12-37-220(B)(23) and 12-4-720(A)(3) provide that the

personal property of banks and savings and loan associations, including motor
vehicles, is exempt from property taxes. No application for this exemption is
necessary.

 South Carolina Code §§12-37-220(B)(23) and 12-4-720(A)(3) provide that beer

and wine are exempt from property taxes. No application for this exemption is
necessary.

 South Carolina Code §§12-37-220(B)(10) and 12-4-720(A)(1) provide that the

property of telephone companies and rural telephone cooperatives used in
providing rural telephone service that was exempt from property taxation as of
December 31, 1973, is exempt from property taxes, provided that the amount of
property subject to property taxes in any tax district is not less than the net
amount to which the tax millage was applied for the year ending December 31,
1973. Property in any tax district added after December 31, 1973, is also exempt
in the same proportion that the exempt property of the company or cooperative
as of December 31, 1973, in that tax district bears to the total property of the
company or cooperative as of December 31, 1973, in the tax district.
Application for this exemption must be filed with the Department within the
period provided in South Carolina Code §12-54-85(F) for claims for refund.

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 South Carolina Code §12-37-220(A)(11) exempts from property taxes all

property of public benefit corporations established by a county or municipality
and used exclusively for economic development which serves a governmental
purpose as defined in Internal Revenue Code §115.

 South Carolina Code §12-37-220(B)(33) provides that all personal property,

including aircraft of an air carrier which operates an air carrier hub terminal
facility in South Carolina for 10 consecutive years from the date of qualification,
are exempt from property taxes. An air carrier hub terminal facility is defined in
South Carolina Code §55-11-500. Further, all aircraft and associated personal
property owned by a company owning aircraft meeting the requirements of
South Carolina Code§55-11-500(a)(3)(i) (i.e., two or more specially equipped
planes that are used for the transportation of specialized cargo, irrespective of
the number of flights) is exempt from property taxes. South Carolina Code
§§12-4-720(A)(1) and 12-37-220(B)(33) provide that application for this
exemption must be filed with the Department within the period provided in
South Carolina Code §12-54-85(F) for claims for refund.

 South Carolina Code §12-37-220(B)(51) exempts 100% of the value of a newly

constructed detached single family home offered by a residential builder or
developer through the earlier of (a) the property tax year in which the home is
sold or otherwise occupied, or (b) the property tax year ending the sixth
December 31 after the home is completed and any required certificate of
occupancy is issued, provided required notice is given for each year of eligibility
and the county approves.

To obtain this exemption, the owner of the property must notify the county
assessor and auditor by written affidavit that the property is eligible for the
exemption and is unoccupied. In the first year of eligibility, this notification
must be made no later than 30 days after the certificate of occupancy is issued.
In subsequent years of eligibility, notification must be made by January 31st of
the applicable tax year.

17. AD VALOREM TAXATION OF LEASEHOLD

INTERESTS IN CERTAIN PROPERTY
If real property subject to an exemption from ad valorem property taxes is leased for a
definite term to a lessee who does not qualify for an exemption, the leasehold interest of
such person is subject to tax and the liability for property taxes shifts to the lessee. See,
South Carolina Code §12-37-950 and Clarendon County ex rel Clarendon County
Assessor v. TYKAT, Inc., 394 S.C. 21, 714 S.E. 2d 305 (2011).

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18. MULTI-COUNTY INDUSTRIAL PARKS

South Carolina Code §4-1-170 provides that a joint industrial or business park (referred
to as a multi-county industrial park) can be established by two or more counties
pursuant to a written agreement between those counties, as provided in Section 13 of
Article VIII of the South Carolina Constitution.

The multi-county park area is exempt from property tax. The owners of any property in
the park will pay a fee in the amount equal to the property taxes that would have been
due and payable if the property was not in a multi-county industrial park, unless the
parties agree to a negotiated fee in lieu of property tax. The fee is treated like a property
tax for purposes of collection and enforcement and the owners must file returns as if the
fee were a property tax. See Negotiated Fees in Lieu of Property Taxes, Chapter 6 for a
detailed discussion of negotiated fees in lieu of property taxes.

A county may issue special source revenue bonds to help fund the project or to allow an
entity paying a multi-county park fee in lieu of taxes a credit against the fee. However,
the special source revenue bonds or the credit amount must be used solely for the
purpose of paying the cost of acquiring, constructing, or improving (1) infrastructure
serving the county, municipality or project, (2) improved or unimproved real estate and
personal property including machinery and equipment used in the operation of a
manufacturing or commercial enterprise or (3) aircraft which qualifies as a project
under the Simplified Fee (South Carolina Code §12-44-30(16)) which enhances the
economic development of the county or municipality.

If the bonds or monies from a credit against the fee are used to pay for the costs of
personal property and the personal property is later removed from the project and is not
replaced with qualifying property, the amount of any fee due on the property must be
paid for the year the property is removed from the project and for the 2 years following
its removal from the project. If any bond funds or credit funds are used to pay for both
real property and personal property or infrastructure and personal property, all the funds
will be presumed to be used first to pay for the personal property. See South Carolina
Code §4-1-175. See Negotiated Fees in Lieu of Property Taxes, Chapter 6, for a
detailed discussion of special source revenue bonds.

Additionally, a taxpayer located in a multi-county industrial park creating qualifying

new, full time jobs is eligible for an additional $1,000 job tax credit. See Business
Income Tax, Chapter 2, Section 9, for a discussion of the job tax credit benefits.

19. REAL PROPERTY EXEMPTION AND ALTERNATE

VALUATION
South Carolina Code §12-37-3135 allows real property that undergoes an assessable
transfer of interest (ATI) after 2010 to be subject to a partial exemption/alternate

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valuation if eligibility requirements are met. To obtain the partial exemption/alternate

valuation, the following requirements must be met:

 the property must be subject to property tax at a 6% assessment ratio before the
ATI;

 the property must remain subject to the 6% assessment ratio after the ATI and
thereafter; and

 the owner must notify the assessor that the property will be subject to the 6%
assessment ratio before January 31st of the property tax year for which the owner
first claims eligibility for the partial exemption/alternate valuation.

The partial exemption will be applied to the fair market value of the property as
follows:

If the “ATI fair market value” exceeds the “current fair market value” (see meaning
of terms below), the partial exemption is allowed and the ATI fair market value is
reduced by an amount equal to 25% of the ATI fair market value. The resulting
amount, referred to as the “exemption value,” becomes the taxable value for the
property. However, the exemption value cannot be less than the currently fair
market value of the property. If the exemption value exceeds the current fair market
value of the property, then the current fair market value becomes the taxable value
for the property.

If the ATI fair market value is less than the current fair market value of the property,
the partial exemption is not allowed and the ATI fair market value becomes the
taxable value for the property.

In determining if the partial exemption/alternate value is allowed, the following

terms are relevant.

“Fair market value” is the fair market value of the real property as determined by
the assessor from an initial appraisal, or as reappraised either after an ATI or
periodically under South Carolina Code §12-43-217.

“Current fair market value” is the fair market value as reflected on the assessor’s
records for the current year. It is the full value of the property without regard to the
15% cap.

“ATI fair market value” is the fair market value of the property after the latest ATI.

“Exemption value” is the ATI fair market value reduced by the 25% exemption.

See Act 57, §1 of 2011.

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