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January 24, 2018
S. Printed 1/24/18--S.
Read the first time January 9, 2018.
To whom was referred a Bill (S. 759) to amend Section 12-37-220, as amended, Code of Laws of South Carolina, 1976, relating to property tax exemptions, so as to allow an exemption, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, SECTION 1, page 1, by striking lines 25 through 37 and inserting:
/ "( )(a) to the extent not already exempt pursuant to Section 12-37-250 and this section, the dwelling house in which he resides and a lot not to exceed one acre of land owned in fee or for life, or jointly with a spouse, by a person with a brain or spinal cord injury, is exempt from all property taxation provided the person furnishes satisfactory proof of his disability to the Department of Revenue. The exemption is allowed to the surviving spouse of the person so long as the spouse does not remarry, resides in the dwelling, and obtains the fee or a life estate in the dwelling. To qualify for the exemption, the dwelling house must be the domicile of the person who qualifies for the exemption and the person must possess a doctor's statement declaring that the person is one hundred percent disabled as a result of the brain or spinal cord injury; /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. for Committee.
Explanation of Fiscal Impact
Introduced on January 9, 2018
This bill adds a new property tax exemption under Section 12-37-220 for the home of an individual who is at least 50 percent disabled due to a brain or spinal cord injury. In order to receive the exemption, the taxpayer must apply to the Department of Revenue (DOR). The Department of Revenue currently administers similar existing property tax exemptions and has staff and procedures in place. Therefore, the bill is not expected to impact expenditures for the general fund, other funds, or federal funds.
This bill would allow a property tax exemption for the home and no more than a one acre lot on which the home dwells for individuals who are at least 50 percent disabled as a result of a brain or spinal cord injury. This exemption would also apply to a surviving spouse of the disabled or to a trustee holding the property for the benefit of the disabled.
Currently, individuals who are paraplegic or hemiplegic are allowed a similar exemption from property taxes on a home. Individuals who are totally and permanently disabled are allowed a homestead exemption for the first $50,000 of home value, and all owner-occupied homes are exempt from school operating property taxes. This new exemption would apply to any property taxes not already exempt under an existing exemption.
In order to estimate the number of individuals expected to qualify for this exemption, we reviewed both national data and South Carolina data extracted by Revenue and Fiscal Affairs from the all-payer hospital data system. There are significant limitations to the available statistics due to a lack of data regarding disability for individuals with a traumatic brain injury. Data from the Veterans Benefits Administration regarding the percentage of disability for recipients are used as a proxy to determine the distribution of disability. Figure 1 outlines these calculations and the associated data sources.
Based upon this analysis, we estimate that there are approximately 3,859 individuals in South Carolina with a spinal cord injury (SCI) who are at least 50 percent disabled. Of these, we estimate that approximately 3,481 are fully exempt due to paralysis, 40 are currently receiving the homestead exemption due to total disability, and 338 are not exempt. For individuals with a traumatic brain injury (TBI), we estimate approximately 31,416 individuals are at least 50 percent disabled. Of these, we estimate that approximately 534 are fully exempt due to paralysis, 3,330 are currently receiving the homestead exemption due to total disability, and 27,552 are not exempt.
The homeownership percentage for South Carolina is 68.4 percent according to 2016 5-year American Community Survey data from the U.S. Census Bureau. We applied this percentage to the eligible individuals to determine the number expected to live in an owner-occupied home. The remaining individuals are expected to live in a rental property and therefore not qualify for the exemption. Figure 2 outlines these calculations.
For individuals currently receiving the $50,000 homestead exemption for aged and disabled, we reduced the estimated average home value of $155,345 for tax year 2018 by $50,000 to account for the amount currently exempt from all property taxes. The remaining $105,345 is exempt from school operations and only subject to the remaining millage. For tax year 2018, we estimate that the statewide millage rate is 351.1 and the school operating millage is 172.2, leaving 178.9 mils. Multiplying the home value by the 4 percent assessment ratio and the millage rate, the exemption will reduce property taxes further by approximately $754 for individuals currently receiving the homestead exemption. Multiplying $754 times 2,305 individuals (27 SCI; 2,278 TBI) yields an estimated local property reduction of $1,738,000 for this group.
For individuals not currently receiving a homestead exemption, the exemption will apply to the full home value for all non-school operating millage since school operating millage is fully exempt for owner-occupied property. Using the home and millage values cited above, we estimate that this exemption will reduce local property taxes for these individuals by an average of $1,112 each. Multiplying $1,112 by 19,077 individuals (231 SCI; 18,846 TBI) yields an estimated local property tax reduction of $21,214,000.
Combined, this bill is expected to reduce local property taxes by $22,952,000 in FY 2018-19. To the extent possible giving the millage rate increase limitations, we anticipate that local governments will offset this loss through increased millage for all classes of property.
Figure 1. Estimated SC Individuals with 50 Percent or Greater Disability Due to Spinal Cord or Traumatic Brain Injury
(All calculations are rounded to the nearest whole number)
Column Notes Spinal Cord Injuries 1 a Spinal Cord Injuries (Excludes fatalities) (1996-2016) 3,578 2 3 b Spinal Cord Injury Prevalence in U.S. 276,000 4 S.C. Population as a % of U.S. 1.5% 5 Estimated S.C. Spinal Cord Injury Prevalence 4,140 6 7 Average Estimate from S.C. and U.S. data
(c 1 and c 5) 3,859 8 a Severed Spinal Cord 332 9 c Quadriplegic/Paraplegic Estimate 3,149 10 Estimated Fully Exempt due to Paralysis
(c 8 + c 9) 3,481 11 Estimated Individuals not Fully Exempt (c 7 - c 10) 378 12 13 d Estimated % Homestead Exempt for total disability 10.6% 14 Estimated Homestead Exempt (c 11 *c 13) 40 15 16 Estimated Individuals not Exempt (c 11 - c 14) 338 17 18 19 Traumatic Brain Injury 20 a TBI with 50% likelihood of long-term disability (1996-2016) 26,470 21 Annual Estimate based upon S.C. data (c 20/20 years) 1,324 22 23 e Annual U.S. Estimate of TBI with Permanent Damage 80,000 24 S.C. Population as a % of U.S. 1.5% 25 Annual S.C. Estimate based upon U.S. data 1,200 26 27 Average Estimate from S.C. and U.S. data
(c 21 and c 25) 1,262 28 29 Life Expectancy 79 30 f Reduction related to injury 7 31 Resultant life expectancy 72 32 Less 18 years for minors 18
(c 27 * c 33)
(c 35 * c 36)
(c 37* c 40)
Figure 2. Estimated Property Tax Reduction
(All calculations are rounded to the nearest whole number) Column Notes Description Estimated Currently Fully Tax Exempt Estimated Currently Homestead Exempt Estimated Currently Not Exempt Total 1 a Spinal Cord Injuries (SCI) 3,481 40 338 3,859 2 a Traumatic Brain Injuries (TBI) 534 3,330 27,552 31,416 3 a Total Eligible Individuals 4,015 3,370 27,890 35,275 4 5 b Estimated Homeownership 68.40% 68.40% 68.40% 68.40% 6 Homeowners (SCI) 2,381 27 231 2,639 7 Homeowners (TBI) 365 2,278 18,846 21,489 8 Estimated Total Homeowners 2,746 2,305 19,077 24,128 9 10 Average Home Value $155,345 $155,345 $155,345 $155,345 11 Exempt Home Value $155,345 $50,000 $0 n/a 12 Remaining Home Value $0 $105,345 $155,345 n/a 13 14 Total Statewide Millage 351.1 351.1 351.1 351.1 15 School Operating Millage (Fully Exempt) 172.2 172.2 172.2 172.2 16 Remaining Millage 178.9 178.9 178.9 178.9 17 18 Remaining Assessed Value (4% of Home Value) $0 $4,214 $6,214 n/a 19 Average Property Tax (Assessed Value * Remaining Millage) $0 $754 $1,112 n/a 20 21 Property Tax Reduction
(rounded to thousands) $0 $1,738,000 $21,214,000 $22,952,000 Notes: a See Figure 1 for Calculations b U.S. Census Bureau, 2016 5-year American Community Survey, S.C. Owner Occupied Housing Units as a % of Occupied Housing Units
Frank A. Rainwater, Executive Director
Revenue and Fiscal Affairs Office
TO AMEND SECTION 12-37-220, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO ALLOW AN EXEMPTION FOR THE DWELLING HOUSE AND ONE ACRE OF LAND FOR A PERSON WITH A BRAIN OR SPINAL CORD INJURY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-37-220(B) of the 1976 Code, as last amended by Act 40 of 2017, is further amended by adding a new item at the end appropriately numbered to read:
"( )(a) to the extent not already exempt pursuant to Section 12-37-250 and this section, the dwelling house in which he resides and a lot not to exceed one acre of land owned in fee or for life, or jointly with a spouse, by a person with a brain or spinal cord injury, is exempt from all property taxation provided the person furnishes satisfactory proof of his disability to the Department of Revenue. The exemption is allowed to the surviving spouse of the person so long as the spouse does not remarry, resides in the dwelling, and obtains the fee or a life estate in the dwelling. To qualify for the exemption, the dwelling house must be the domicile of the person who qualifies for the exemption and the person must possess a doctor's statement declaring that the person is at least fifty percent disabled as a result of the brain or spinal cord injury;
(b) when a trustee holds legal title to a dwelling for a beneficiary and the beneficiary is a person who qualifies otherwise for the exemption provided in subitem (a) and the beneficiary uses the dwelling as his domicile, the dwelling is exempt from property taxation in the amount and manner as dwellings are exempt pursuant to subitem (a);"
SECTION 2. This act takes effect upon approval by the Governor and applies for property tax years beginning after 2017.
This web page was last updated on January 24, 2018 at 7:43 PM