Chapter 3 - Land Use

  • Government rights in land

    • States right to tax real estate

      • Passes authority to tax to counties and municipalities

      • Point of sale - appraised value established by how much the buyer paid for the property

      • Ad valorem - means “at value”

      • Milage - varies by district 

      • General and special assessments - additional taxes on properties benefiting from a betterment for something the district has done

    • Assessment rates in SC

      • 4% for owner occupied residential rates

      • 6% for all other properties

    • Tax formula 

      • Appraised value * assessment rate = assessed value 

      • Assessed value * millage rate = property taxes 

A rental property has been appraised at $92,500. If the millage rate is 127 mills, what are the property taxes?

$92,500 * 6% (assessment rate for rental) = $5,550

$5,550 * .127 = $704.85

  • rollback taxes

    • Classify property as agricultural property to get 4% rate

      • Must have 5 acres or more if growing timber

      • Must have 1 acres or more for all other products

    • Must be used for agricultural purposes

    • If ever used for any other purpose the country will go back 5 years and calculate the difference between the 4% and 6% rate

  • Eminent domain

    • Right of the state to take private property

    • Condemnation is the legal procedure exercised by the state in eminent domain

    • Two conditions must be met for eminent domain:

      • Must be for public benefit

      • Just compensation must be paid

  • Escheat

    • Reversion of property to the state when one dies intestate (no will) with no legal heirs 

  • Public controls based on police power

    • Police power

      • Authority granted by the government to enforce certain laws, regulations, or policies

        • Restrictive power - ex: the real estate commission has police power to enforce the license laws

        • Zoning laws - regulations/restrictions on how land can be used 

          • Categories of real zoning property:

            • Residential

            • Commercial

            • Industrial

            • Agricultural

            • Special purpose 

        • Ordinances - the primary intent is to assure proposed land uses conform with the master plan (state)

        • Variances - permits a change in the specifications required by the zoning ordinance 

        • Non-comforming use - exists when a property is currently being used for some purpose other than what the property is zoned

          • Can be used in this manner as long as the current owner owns the property

        • Spot zoning - occurs when a small area in an existing neighborhood is singled out and place in a different zone from the neighboring property 


  • * Buffer zone - strip of land used to separate two conflicting zone types

  • Building codes

    • Must receive a permit prior to constriction

    • Ensures constriction is to code

    • Ensures constriction meets zoning laws 

    • Permit applications are made to the municipality

  • Subdivision regulations

    • HOA’s have police power to ensure owners comply with CC&R’s 

    • HOA’s cna take any actions necessary to ensure compliance 

  • Health and sanitation laws

  • Environmental protection laws

* environmental impact report 

  • Assessment of possible impact a proposed project may have on the environment

  •  Private controls based on police power

    • Restrictions we put on ourselves

      • Deed restrictions

        • Restrictions placed in the deed, which conveys from one owner to the next

      • CC&R’s 

        • Put in place by developers and enforced by HOA’s

        • All owners, present and future, must comply with the restrictions

  • Environmental hazards

    • All known environmental hazards must be fully disclosed 

      • Asbestos

        • Can cause serious health issues such as lung disease

      • Underground storage tanks 

        • Used to store fuel oil or heating 

        • Should be inspected by DHEC

        • Must be removed or all fuel oil pumped out and filled with sand 

      • * radon

        • Corless, odorless and tasteless radioactive gas

        • Can effect new and old homes alike

        • Much greater concern for homes with living area below the surface of the ground and homes that have well water

      • EIFS (artificial stucco)

        • Water or moisture getting between the stucco and the wall can cause massive damage

        • Many class action lawsuits are pending

        • Should not be a problem if properly installed 

      • Toxic mold

        • Can cause serious health problems 

        • Can cause weakened immune systems

      • * Lead based paint 

        • Can cause serious illness or death if ingested

* all homes built prior to 1978 must have a written lead based paint disclosure before selling or renting

  • Must provide all buyers/tenants or homes built prior to 1978 a EPA pamphlet “protect your family from lead in your home”

  • Wetlands 

    • Land where saturation with water is dominant 

    • Protected areas due to some species living in the wetlands

    • Includes swamps, marshes, and similar ares 

  • * Real property tax laws 

    • Homeowner tax breaks

      • * mortgage interest deductions

        • Up to 1 million dollars on acquisition debt

        • Up to $100,000 on equity debt

        • Up to 1.1 million dollars in total 

      • Property tax deductions

      • Homestead exemption (only in SC)

        • Those qualified may deduct $50,000 from their homes appraised value before property taxes are calculated

        • Qualifications for the exemption:

          • Must be 65 years of age

          • Totally disabled

          • Legally bind

          • Resident of SC for one year as of Dec 31st

      • * Discount points - prepaid interest to buy down the interest rate

        • Each point cost 1% of the purchase price

        • Each point will lower the interest rate by 1/8th of one percent

        • Deductible by the buyer only (regardless of who pays)

    • Capital gains tax on sale of real property

      • Basis - price paid for the property

      • Adjective basis - live paid for the property plus closing costs and any capital improvements to the property

      • Amount realized - sells price, minus selling expenses

      • Gain - amount realized minus adjective basis 

        • example:

$100,000 (purchases price) + $3,000 (closing costs) = $103,000 (adjusted basis)

$130,000 (sales price) + $9,000 (selling expenses) = $121,000 (amount realized)

$121,000 - $103,000 = $18,000 (capital gain)

  • Capital gains exemption for personal residence 

    • $250,000 for single homeowners or married and file separately 

    • $500,000 for married homeowners

* must know all qualifications for the exemption:

  • Must have owned the home for at least 2 years

  • Must have lived in the home for at least 2 of the last 5 years

  • No deduction if the home sold at a loss

  • 1031 tax-deferred exchange 

    • Method to put off or delay paying capital gains by simply exchanging like properties and no monies passing hands

    • If the exchange is not even and one has to add anything of value to even up the trade, this is called “boot”

    • The party receiving the “boot” must pay taxes on the “boot”

  • Delayed exchange 

    • Method to put off or delay paying capital gains taxes by selling a property and buying a like property in its place

    • One has 45 days to identify a like property

    • One has up to 80 days to close on new property

    • The 180 days starts on the day the property is sold, not the end of the first 45 days

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