Finance
February 2, 2024
If you’re considering a move to South Carolina, one of the most important questions you need to answer is whether you want to rent a home or buy one. The process of making a choice can be stressful and wrought with questions, especially when it comes to South Carolina property tax laws. In this guide, we’ll discuss the differences between renting and buying and dive into property taxes in South Carolina to help make your decision a little easier.
Buying vs. Renting in South Carolina
The decision to rent or buy in South Carolina (or any state) isn’t always an easy one. There are pros and cons to each option. Then you also need to consider your personal preferences and needs. The answer isn’t always readily apparent.
When you rent, you don’t actually own the home. You sign a lease agreement and pay the agreed-upon amount every month. You can renew your lease when it ends, but your landlord may increase how much you’re required to pay to stay there.
As you don’t own the property, you can’t make any significant changes to the home. You may even need to request permission to make minor changes, such as painting the walls. On the other hand, you don’t have to worry about paying for maintenance. If something breaks, you let your landlord know, and they take care of it. The landlord is responsible for all of the costs associated with the property.
When you own a home, it’s yours. You can make as many alterations as you want, whether it’s painting the walls, renovating the kitchen, or building an addition. You also get to take advantage of tax breaks that renters don’t, such as the mortgage interest tax deduction or tax credits for making energy-efficient upgrades. While you do have to pay your mortgage each month (unless you paid the full price in cash), those payments don’t change if your mortgage has a fixed rate.
On the other hand, you’re responsible for all of the costs of ownership. If something breaks, you need to fix it or hire a professional to do the job. In addition to your mortgage, which requires closing costs and other fees, lenders require you to have homeowner’s insurance. You also have to pay property taxes each year.
South Carolina Property Tax Laws: How They Work
The great news about South Carolina property taxes is that they’re fairly affordable. They’re much lower than the national average of 1.08%. One of the reasons for this is that owner-occupied homes have a lower assessment rate than commercial properties or properties used as second homes. Another reason why they’re so low is that primary residences aren’t subject to school taxes, which tend to make up a significant amount of property tax rates in other states.
So, how exactly does property tax work in the state? First of all, you pay property taxes each year based on the assessed value of your property and your local tax rate. Your home’s assessed value equals a certain percentage of the market value. That percentage (the assessment ratio) is 4% for primary residences. If your home functions as a second home (not owner-occupied), the rate is 6%.
Assessors appraise properties every five years. Reappraisals enable them to determine the full market value of your home and other homes in your area. Increases generally cannot exceed 15%. If you make any significant changes to your home (such as an addition), however, the cap is removed.
Factors That Influence Property Taxes
Several factors influence your property taxes. One of the biggest is where you choose to live. The effective property tax rates (or millage rates) vary by county, ranging from 0.37% in Horry County up to 0.87% in Newberry County. The effective tax rate is what you pay as a percentage of your home’s value.
Another significant factor that plays a role in your property taxes is the assessed value of your home. The higher the value, the more you pay — and vice versa. Let’s say you purchase a home in South Carolina for $150,000 in Horry County. At 0.37%, your property taxes would be $558. If that same home were in Newberry County, your property taxes would be $1,299. In counties like Beaufort, homes cost more on average, but the tax rates are some of the lowest in the state. Even though the rates are lower, homeowners in this county pay some of the highest property taxes in South Carolina because their homes are worth more.
While you could crunch the numbers, you can also use SmartAsset’s property tax calculator to get an idea of how much you might pay each year if you do decide to buy a house in South Carolina. Some counties also provide property tax estimation calculators on their websites. The numbers might not reflect the actual amount you’ll have to pay, but they can give you a good idea of what you might be looking at if you own a home in that county.
Again, South Carolina property taxes are much lower than in other states because owner-occupied homes are exempt from school taxes. You may also be exempt from school taxes if you’re 65 or older, legally blind, or permanently disabled Known as the Homestead Exemption, this South Carolina benefit means that the first $50,000 of the fair market value of your home is exempt from property taxes. You must reside in the state for at least one full year to qualify.
Key Takeaways
Choosing between renting and owning isn’t always easy. You have numerous factors to consider to make the best choice for you and your family. One of the biggest deciding factors for many people is the property taxes in the state. South Carolina has some of the lowest property tax rates in the country, but they’re still an expense that every homeowner must pay. When considering buying vs. renting, don’t forget to include your potential property tax obligations as well as the other costs of homeownership in your decision-making process. Talk to a financial expert about whether renting or owning a home is best for you.
