Taxes - Chris DeLoach

House Plan Realty - Charleston, South Carolina

Free Help for Buyers ... Low Listing Costs for Sellers ... 843-270-1272

New Tax Law Changes

Recent State Tax Changes:

1. Sales tax on groceries has been reduced from 5% to 3%.

2. Taxes for school operations will be removed from homeowners' primary residence property tax.

3. To offset the reduction of property taxes on homes, sales taxes have increased by 1% except on accommodations, groceries, and items with a maximum sales tax cap.

South Carolina Taxes

Tax Rate Range: Low - 2.5%; High - 7%
Income Brackets: ** Lowest - $2,400; Highest - $12,000
Number of Brackets: 6
Personal Exemptions: * Single - $3,050; Married - $6,100; Dependents - $3,050
Standard Deduction: Single - $4,750; Married filing jointly - $9,500
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Retirement Income Taxes: Retirement income is taxed. Social Security exempt. Under age 65, $3,000 in pension income is exempt. At 65, the deduction is $10,000. After 65, the deduction if $15,000.

Retired Military Pay: Retirees with 20 or more years of active duty can deduct up to $3,000 annually until age 65 and up to $10,000 per year after age 65. This deduction extends to the surviving spouse. Pension or retirement income received for time served in the National Guard or Reserve components is not taxable. Survivor benefits are taxed following federal tax rules.
Military Disability Retired Pay: Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentally of war.
VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxes
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Property Taxes

Property tax is assessed and collected by local governments. The market value of a legal residence and up to 5 acres of surrounding land is assessed at 4%. For homeowners 65 and older, the state's homestead exemption allows the first $20,000 of their property's fair market value to be exempt from local property taxes. South Carolina imposes a casual excise tax of 5% on the fair market value of all motor vehicles, motorcycles, boats, motors and airplanes transferred between individuals.

Inheritance and Estate Taxes

There is no inheritance tax and the estate tax is related to federal estate tax collection.

For further information, visit the South Carolina Department of Revenue site or 800-763-1295.
* State allows personal exemption or standard deductions as provided in the Internal Revenue Code.

If taxes are important to you, take a look at this state tax link: South Carolina Taxes

For local Charleston tax data, such as property tax information, go to: Charleston County Taxes

*This information is assumed to be accurate but is not guaranteed as accurate as tax laws change frequently. This is not intended to be tax advice and should not be relied upon for any tax planning purposes.

Nationally, South Carolina is ranked 9th for states with the lowest per capita tax rates. There is no state (there is local) real or personal property tax.

There is no state intangible tax in South Carolina and there is no social security and pension tax.

Primary residence assessment ratio: 4% . Estate taxes are between 6-8%. For residents who are 65 and older there is an annual $50,000 homestead exemption. Also long term capital gains are taxed at a lower rate than earned income. Because of such low tax rates this has greatly contributed to the low cost of living.

NEW: 100% of the fair market value of the property taxes for school operations is removed from homesteads (a 2/3rds majority vote of each legislative body is required to override this exemption).

S ales Taxes

NEW: A recent change in taxs ( H.4449) decreases the state sales tax on groceries from 5% to 3%. The change also increased the sales tax by 1% on everything, except accommodations, groceries, and items with a maximum sales tax cap.

Generally, sales taxes will run from 6%-7 1/2 depending on where you buy within the state.

Gasoline Tax: 16 cents/gallon
Diesel Fuel Tax: 16 cents/gallon
Gas Tax: 16 cents/gallon

Personal Income Taxes

South Carolina collects taxes from its residents at the following rates over six income brackets:

-- 2.5% on the first $2,570 of taxable income
-- 3% on taxable income between $2,571 and $5,140
-- 4% on taxable income between $5,141 and $7,710
-- 5% on taxable income between $7,711 and $10,280
-- 6% on taxable income between $10,281 and $12,850
-- 7% on taxable income of $12,851 and above.

5 Property Tax Questions You Need to Ask

What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.

How often are properties reassessed and when was the last reassessment done? Generally taxes jump most significantly when a property is reassessed.

Will the sale of the property trigger a tax increase? Often the assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.

Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate?

Does the current tax bill reflect any special exemptions that you might not qualify for? For example, many tax districts offer reductions to those 65 or over.

Basic Rule for Capital Gains - the 2 out of 5 rule

When you sell a stock, you owe taxes on your gain—the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.

In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:

1. Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.

2. Add Adjustments:

---Cost of the purchase—including transfer fees, attorney fees, inspections, but not points you paid on your mortgage

---Cost of sale—including inspections, attorney’s fee, real estate commission, and money you spent to fix up your home just prior to sale.

--Cost of improvements—including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.

3. The total of this is the adjusted cost basis of your home.

4. Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.

A Special Real Estate Exemption for Capital Gains

Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:

You have lived in the home as your principal residence for two out of the last five years. You have not sold or exchanged another home during the two years preceding the sale.

You may also qualify for this exemption if you meet what the IRS calls “unforeseen circumstances” such as job loss, divorce, or family medical emergency.

Chris DeLoach, MAT, MEd, ABR, BIC

843-270-1272 or 877-773-9270

Chris@houseplanrealty.com

New Tax Law Changes

South Carolina Taxes

5 Property Tax Questions You Need to Ask

Basic Rule for Capital Gains - the 2 out of 5 rule