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New Developments -- SC Property Tax on Boats
In both 2006 and 2007, the South Carolina legislature changed the rules on property
taxation of boats. Effective in 2006, all boats became subject to the same taxability
rules whether owned by residents or non-residents of South Carolina. Any boat
not used exclusively in interstate commerce may be taxed in South Carolina if
it is present in the state for 90 total days or 60 consecutive days in a taxable
year. Apparently in return for this tightening of the rules, the legislature
in 2006 gave county authorities the ability to reduce the tax assessment rate
for all boats having sleeping berths, a galley and a head to the rate applicable
to motor homes -- 6% of fair market value in most cases. But if not reduced by
county ordinance, the assessment rate in any county would remain at the original
10.5%. Georgetown County has enacted this 6% option but requires the filing of
an application to obtain the benefit of it.
South Carolina’s 2007 amendment allows all boats – not just live-aboards – a
reduced rate of 6%, if the taxing county takes independent action to drop the
rate. The same time periods apply as above. When the 2007 law was a bill being
discussed in the State legislature, it was hoped that the statewide minimum time
periods for taxability would be 90 consecutive and 180 total days, instead of
60 and 90 respectively. There still is a possibility that the longer periods
may be made effective for tax year 2008.
Time spent in South Carolina for repairs under written contract does not count
toward the taxability threshold. For transient boats, no credit is available
for taxes paid to another state.
Based on the 2007 law, Horry County reduced its effective property-tax assessment
rate from 10.5% to 6% for all boats. At the same time, the County kept the universe
of taxable boats at the limit permitted by the legislature – all boats based in
the County and present in South Carolina for 60 consecutive days or 90 days in
the aggregate in any year. The State Department of Revenue has made clear that
the time periods for taxability are a county option -- i.e., the 60 and 90 days
are minimum authorized periods, and any county may apply longer periods by adopting
a county ordinance. Horry County did not take the opportunity to expand the minimum
periods. Beaufort County is currently in advanced stages of reducing rates under
the new law and might expand the minimum periods for taxability at the same time.
Two possibilities for a discount below the regular assessment rate may be available
depending on the circumstances:
For boats that are "used exclusively in interstate commerce," spend 30 or more
days in the State and have bases in at least one other state, South Carolina imposes
an apportioned tax, pro-rated according to a fraction expressed as the number
of days present in South Carolina during the year divided by 365. In the case
of a transient boat spending 90 days in the State, applying that formula could
produce a 75% discount on South Carolina taxes. If apportionment of taxes is
also available in the state of the boat’s other base, an owner might receive at
least a 25% discount on that state’s taxes. The problem comes in trying to qualify
a boat as “used exclusively in interstate commerce.” It currently is unclear
whether a recreational boat, as opposed to a commercially-operated boat, may be
considered to be used in “interstate commerce” based on its travels.
Another discount may be available as well. A boat that is set up to be a “live-aboard” and
actually is used as a primary residence by a direct owner may apply for a special
assessment rate of 4%, as opposed to the regular 6%. Application must be made
to the County Auditor where the boat is based in South Carolina. |
