3.3 South Carolina Property Taxes & Closing Issues

The 4% vs. 6% Assessment Ratio

South Carolina property tax is built on an assessment ratio that differs sharply by how the property is used — the single most tested SC tax point.

The 4% rate is not automatic — the owner must apply for the legal-residence (primary-residence) classification at the county assessor's office and certify the home is their primary residence. A buyer who forgets to file stays at 6% and overpays. Advising a residential buyer to file the 4% application after closing is a routine SC agent service.

Trap: The 4% rate covers only one primary residence. A client who owns a beach condo as a second home pays the 6% ratio on it, no matter that they also own a 4% home elsewhere.

How the Tax Is Calculated

South Carolina property tax uses three numbers in sequence:

Appraised (market) value x Assessment ratio = Assessed value

Assessed value x Millage rate = Annual tax

A mill is one-tenth of a cent: one mill = $1 of tax per $1,000 of assessed value. Millage is set locally by counties, municipalities, and school districts.

Worked example: A primary residence appraised at $300,000 at the 4% ratio has an assessed value of $12,000. At a millage rate of 250 mills (0.250), the annual tax is $12,000 x 0.250 = $3,000. The same house used as a rental at the 6% ratio would be assessed at $18,000 and taxed at $4,500 — a 50% jump purely from the ratio. Mastering this ratio-then-millage order is essential for SC math items.

Reassessment occurs on a county-wide cycle (generally every five years), with a statutory cap limiting how much the taxable value can rise in a single reassessment for property that has not changed hands.

Nonresident Seller Withholding (Form I-290)

A South Carolina-specific closing wrinkle: when the seller is a nonresident of South Carolina, the buyer (through the closing attorney) must withhold state income tax on the sale under S.C. Code Section 12-8-580.

The withheld amount is remitted to the SC Department of Revenue on Form I-290 by the 15th of the month after the sale. A South Carolina resident seller is not subject to this withholding. The exam may ask which seller triggers I-290 — the answer is the nonresident seller, not the buyer's residency.

The Deed Recording Fee (Transfer Tax) Recap

Every conveyance of real property pays the deed recording fee ("deed stamps"):

It is customarily paid by the seller (grantor) and collected by the county at recording. Certain transfers are exempt — gifts, transfers to a spouse, and transfers that are not bona fide sales — but a standard arm's-length sale pays the full $1.85 per $500.

The Attorney-Supervised Closing

South Carolina is an attorney-closing state: the courts have held that conducting a residential real estate closing is the practice of law, so a licensed South Carolina attorney must supervise the closing — preparing or reviewing the deed, conducting the title examination, and handling the disbursement of funds. A real estate licensee may attend and assist but may not conduct the closing or give legal advice.

Prorations at Settlement

Closing settles shared expenses as of the closing date so each party pays only for the period they own the property.

Prorations are typically calculated on a daily basis. The party who has already paid an expense covering time after closing receives a credit; the party who owes an expense for time before closing is debited.

Worked example: Annual taxes of $3,000 are unpaid, and closing is on the 90th day of a 360-day proration year. The seller owned the property for 90 days, so the seller is debited 90/360 x $3,000 = $750 (a credit to the buyer, who will pay the full bill later). Knowing who is debited and who is credited is the heart of SC proration questions.

Exam tip: The mortgage-interest, tax, and insurance prorations follow the rule "seller owns the day of closing" only if the contract or local custom says so — read the question for the stated convention before you compute.