South Carolina Property Tax: Understand Your Tax Bill Before You Buy

Many prospective buyers want to know their property tax liability when buying a home. After all, most mortgages estimate both property tax and home insurance and add that to the monthly payment (the money goes into an escrow account the bank uses to pay the property tax bill). If you buy a home with a significant property tax rate, your monthly payment will be higher. You may have heard that South Carolina property tax rates are among the absolute lowest in the United States. They are, indeed, low.

However, it's still important to understand what type of bill you might be looking at (and if you come from a state like New Jersey, be prepared to be pleasantly surprised). Here's everything you need to know to figure out your tax bill.

South Carolina Property Tax: Calculating Your Bill for Charleston, Dorchester, and Berkeley Counties

As Southern Bell Living focuses on the local counties of Charleston, Dorchester, and Berkeley, this post will focus on how to calculate taxes there.

The formula is quite simple.

First, you take the fair market value of your home. Next, you multiply that by your assessment ratio. Multiply that once more by the millage rate. Subtract any potential deductions. Your result will be the amount of tax you owe!

As a formula, it's:

(FMV of your home x Assessment Ratio x Millage Rate) - (FMV of your home x Assessment Ratio x Property Tax Relief) = Tax You Owe

Let's explore each of these components in more detail without further ado.

Fair Market Value of Your Home

The first step to calculating your South Carolina property tax is understanding your home's fair market value. While there is no way to determine this value with 100% accuracy, you can typically ballpark it pretty well - at least well enough to accurately calculate your South Carolina property tax.

To understand what your fair-market home value will be, you have to take a look at comparable sales in the area. Don't look at other active listings. Look at what other homes have sold for, and look for homes similar to the one you want. Pretty soon, you'll have a good understanding of what your home's actual value is.

Assessment Ratio

If you want to buy a primary residence or a privately-owned (non-corporate) agricultural property, your assessment ratio is 4% or 0.04.

For all other real estate, including investment real estate, use 6% or 0.06 for the investment ratio.

Millage Rates

The millage rate is unique per county. One mill is equivalent to 1/1000th of a dollar. These rates vary from city to city and can change dramatically from city to unincorporated area. However, you can use the following averages to get a good sense of your property bill.

• Charleston County average combined millage: 0.253
• Berkeley County average combined millage: 0.304
• Dorchester County average combined millage: 0.373

Deductions and Property Tax Relief

If you are buying your home and you are 65 years of age, or you are legally disabled, or you are legally blind, you can exempt up to $50,000 from the fair market value of your home. So, if your home has a $300k FMV, you can reduce that to $250,000 for the calculations above.

Additionally, if you buy an owner-occupied home, you receive property tax relief - that is, you're exempt from paying the School Operations millage rate. This amount varies but is typically about half of the total millage rate.

Examples of How to Calculate Your Prospective South Carolina Property Tax Bill

Perhaps the best way to illustrate how to calculate your South Carolina property tax is to go through a complete example.

Let's suppose you want to buy a $500k home in Charleston. Further, suppose that the fair market value of that home is, indeed, $500,000. You want to buy it as your principal residence, and the place within Charleston County you wish to buy has a millage rate of 0.250, with a School Operations millage rate of 0.130.

The calculation would then be as follows:

FMV ($500k) * Assessment Ratio (0.04) = $20,000 * Millage Rate (0.25) = $5,000

We would then calculate the deduction:

FMV ($500k) * Assessment Ratio (0.04) * School Operations Millage Rate (0.13) = $2,600

So, in this scenario, you could expect to pay $2,400 ($5,000 - $2,600) in property taxes annually.

Now, suppose that this property was an investment property for you. Then the calculation would look like this:

FMV ($500k) * Assessment Ratio (0.06) = $30,000 * Millage Rate (0.25) = $7,500

Since it's an investment, there's no deduction.

Notice how in this scenario, your property taxes shot up by $5,100!

Let's take a look at one more scenario. Suppose you are over 65 and buying this as your principal residence. Instead of your FMV being $500,000, you can take $50,000 off that number. So the calculation would look like this:

FMV ($450k) * Assessment Ratio (0.04) = $18,000 * Millage Rate (0.25) = $4,500

Now we apply the new deduction:

FMV ($450k) * Assessment Ratio (0.04) * School Operations Millage Rate (0.13) = $2340

In this scenario, you'd save $240 annually by applying for the homestead exemption. Not bad!

Payment Dates

South Carolina is relatively strict about property tax collection. You must pay your taxes by March 17 each year or risk losing your home.

The dates you need to remember are:

• Oct 1 - Property tax rolls open!
• Jan 15 - Property taxes are due.
• Feb 1 - If you pay before Feb 1, but after Jan 15, you must pay a penalty of 3%.
• Mar 16 - If you pay after Feb 1, but before Mar 16, you owe an additional penalty of 7%.
• Mar 17+ - If you pay on Mar 17 or later, you owe an additional 5%.

After March 17, the county can sell the property, if necessary, to collect the delinquent taxes.

South Carolina Property Tax: It's Relatively Easy to Ballpark It

Calculating your South Carolina property tax down to the penny is hard before you receive your first assessment. However, you can almost always get an excellent idea of what you'll be looking at (within a few hundred annually) if you follow the steps above.

For primary residences, please take what you think the home's value will be, multiply it by 4%, and then multiply that by your city's millage rate minus the School Operations millage rate.

For vacation homes, the calculation is even more straightforward, as you need to multiply your home's value by 6% and find your county's total millage. You cannot claim back the School Operations rate on a second home.

Please get in touch with us if you have any questions about calculating your South Carolina property tax on your dream home in Charleston, Dorchester, or Berkeley Counties! We can help you find your prospective property tax and help you find the home that fits your budget!