Understanding South Carolina’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
When selling your home in South Carolina, it’s important to understand the various costs involved, including real estate transfer taxes. These taxes are fees imposed by state, county, or municipal authorities whenever there’s a transfer of property ownership.
We’ll explore the different types of transfer taxes, who is responsible for paying them, and any applicable exemptions. Whether you’re a first-time seller or seasoned in real estate transactions, this guide will help you estimate what you might expect to pay in transfer taxes when selling your property in South Carolina.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of South Carolina area tax services or attorneys should not be considered endorsements.
What are transfer taxes?
Transfer taxes are defined by the Federal Trade Commission as taxes imposed by state or local authorities when the ownership of a property changes hands. This means when you transfer the title of your property—essentially, your legal ownership rights—to someone else, a tax is levied on this transaction.
The specific amount you owe in transfer taxes can vary significantly depending on where the property is located, adhering to the guidelines set by the state, county, or city. These taxes are a fundamental way for jurisdictions to generate revenue, supporting various public services and infrastructure projects within the community.
Who pays for transfer taxes?
In South Carolina, transfer taxes are typically the seller’s responsibility, but this is not mandatory. It’s possible that the buyer and seller can arrange to split the cost or have the buyer handle it. Work this out on your seller agreement before you finalize the transaction. This is an area where a professional real estate agent can assist.
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in South Carolina.
State transfer taxes
Statewide, South Carolina charges a deed recording fee when property changes hands, though this is functionally the state’s transfer tax. This is levied at a rate of $1.85 on realty value of $100-$500 and an additional $1.85 for each $500 increment after, composed of both county and state fees at a rate of $1.30 for the state portion and $0.55 for the county portion.
County transfer taxes
Counties keep their portion of the fee, which is levied at a rate of $0.55 of each $1.85.
City transfer taxes
According to state guidelines, cities, counties, municipalities, or any other special purpose district cannot impose a fee or transfer tax on property ownership transfers.
However, municipalities that had imposed a real estate transfer tax prior to Jan. 1, 1991, may still collect a transfer fee.
Other transfer fees
In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.
If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect.
Are transfer taxes deductible?
Unfortunately, transfer taxes do not qualify as deductible expenses on your income tax returns. However, you may be able to reduce the amount you owe in capital gains taxes.
Capital gains refer to the profit you make from selling your home or other property, which, like other types of income, is taxable at the federal level. The IRS allows sellers to treat transfer taxes as part of the property’s selling costs.
This adjustment can be made by subtracting the transfer taxes from the closing sale price of the home. By reducing the total gain from the sale, sellers can effectively decrease the amount of capital gains tax owed. It’s best to consult a tax professional to determine if this can work for you when tax time rolls around.
Transfer tax exemptions
Some property transactions in South Carolina may be eligible for exemptions from transfer taxes, depending on the specifics of the property transfer. Here are key exemptions to be aware of:
- Transfers of realty valued at $100 or less.
- Realty transferred to the federal government, state agencies, or political subdivisions.
- Transactions exempt under state or federal laws.
- Transfers with no recognized gain or loss under specific IRS codes.
- Realty transfers to partition property without paid consideration.
- Transfers of individual grave spaces at licensed cemeteries.
- Contracts for the sale of timber to be cut.
- Transfers to a corporation, partnership, or trust without consideration beyond equity interests.
- Transfers from a family partnership or trust where no consideration is paid other than a reduction in the grantee’s interest.
- Realty transferred in statutory mergers or consolidations.
- Corrective deeds or quitclaim deeds that confirm title without paid consideration.
- Realty transferred to a mortgagee in foreclosure or by deed in lieu of foreclosure.
- Realty purchased by an agent with principal’s funds transferred back to the principal.
- Title transfers of electric transmission facilities to regulated companies.
Estimating transfer taxes for your home sale
To get a clear estimate of what you might earn from selling your South Carolina home, consider using HomeLight’s Net Proceeds Calculator. This tool provides a detailed forecast by factoring in closing costs such as transfer taxes, agent commissions, and any home improvements. It’s a quick way to see the potential financial outcome of your home sale.
For a precise calculation of your transfer taxes and other closing costs, it’s advisable to consult with a top real estate agent. A skilled agent can provide valuable insight into local market practices, helping you determine whether these expenses might be negotiable and how to approach such negotiations strategically.
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