411 Sunset Drive | Manning, SC 29102
local property tax Credits
Property taxes are only levied by the local (county and/or city) government. Unlike some states, South Carolina exempts all inventories (raw materials, work-in-progress, and finished goods), all intangible property, and pollution control equipment from the property tax.
Three factors are used to determine property taxes:
- Depreciation: In South Carolina, a company’s personal property (machinery, equipment, etc.) is allowed to depreciate annually (once it is placed in service) at a rate established by state law and is depreciated to a residual level of 10% of the original property value. Normally, depreciation is 11% annually for manufacturers and 20% for non-manufacturers.
- Assessment: Manufacturers’ real and personal property is assessed at 10.5% of fair market value, while non-manufacturing companies’ personal property is assessed at 10.5% and real property at 6%.
- Millage Rate: The local millage rate is applied to the assessed value of real and personal property. A mill is equal to $0.001.
Clarendon County’s Ability to Offset Property Tax Liability
To offset property tax liabilities, your company may take advantage of one of two potential incentive programs. Depending on your total investment, your company may qualify for either a five-year abatement of a portion of property tax or, by agreement of Clarendon County, a fee-in-lieu of property taxes.
Five-Year Property Tax Abatement
South Carolina law mandates a five-year abatement of the county’s operating portion of the millage rate. Generally, this portion makes up about 25% to 35% of the local millage rate. If your company invests more than $50,000, you are eligible for this abatement. The advantage of this incentive is that for the first five years your company can substantially reduce local tax liability.
However, if your company is investing more than $5 million, you are eligible for a second incentive that offers savings above that of the five-year abatement. This incentive, called a Fee-in-Lieu of Property Tax (FILOT), replaces the abatement and is offered at the discretion of Clarendon County.
Fee-in-Lieu of Property Tax
South Carolina law allows Clarendon County to enter into a negotiated agreement for a FILOT with a company if total capital investment is $5 million or more. The long-term savings of the FILOT is based on the actual investment (both real and personal property), and depends on both the assessment and millage rates in the county.
This incentive may result in substantial benefits for your company:
- Savings: Payments to local government are significantly reduced through the negotiation of a lower assessment rate (from 10.5% to as low as 6%) and the negotiation of a locked-in millage rate for 20 years or a five-year adjustable rate.
- Planning: Payments to local government are stabilized for the term of the agreement. This ultimately allows a company greater flexibility in financial planning for as long as 20 years.
- Scheduling: If your company is investing more than $45 million, the payment stream can be negotiated to meet financing needs—ultimately, your company can gain control of long-term cash flows. The most common schedule is an equalized or flat annual payment.
- Additional Savings for Substantial Capital Investments: If your company is investing more than $400 million and creating 200 net new jobs, or investing $200 million with $200 million already invested and creating 200 net new jobs, a "Super Fee" is negotiable. This fee can further lower the assessment rate to as low as 4%. In addition, the "Super Fee" lengthens the agreement to as long as 30 years.