Charleston property tax update
The South Carolina legislature reformed property taxes recently and some questions now have answers. (Of course, when laws are enacted, they need to be translated into English so we can understand them so it generally takes time.)
I work with many people who are considering relocation to Charleston, many from very high property tax states and they are always concerned with how much property taxes are on any property that they are considering in the Charleston real estate market.
Basically, property taxes in South Carolina are quite low especially compared with many other States. Reform was apparently needed because home values soared and long time homeowners were not able to stay in their homes because the taxes increased so much over time, they were forced to sell (albeit at very nice profits).
The net result was that property taxes for school were removed from homesteads effectively lowering property taxes. The sales tax was increased except for the previously fully taxed groceries which was reduced to 1%. The hospitality tax combined with higher sales tax shifted some of the burden to the very large tourist population. And homeowners enjoyed reduced property taxes.
Furthermore, there are limits on increases to 15% every five years. But (and there is always a but), when a home transfers from one owner to another, the cap is removed and the assessor can raise the assessed value of your home to the current sales price.
But don't worry, the property taxes will still be reasonable, just not as reasonable as your new neighbor who may have lived in his/her home for a number of years. And a point of sale property tax increase is how many places in the US reassess the value of your home. A good conservative rule of thumb is to estimate 1% of the sale price of your home for property taxes. The property taxes on a $200,000 home should be approximately $2000 and property taxes on a $500,000 home should be approximately $5000.
If property taxes are important to you, you should consider getting a written estimate from the tax assessor prior to writing a contract on any home you are considering purchasing.
And make sure to apply for the 4% tax ratio on your principal residence, it will save you a lot of money.
