Flipper · Matthews, NC · Member since 2015 · 17 posts · 0 votes
Hi folks,
I was looking at a condo in South Carolina tonight with my realtor when she told me that it probably wasn`t worth my while financially to buy a S.C. property to rent out while I live in N.C. because the tax I would have to pay would be very high.
She might referencing that in South Carolina, if the residence isn't your primary residence, you're property tax assessment rate will be 6% instead of 4%.
She might referencing that in South Carolina, if the residence isn't your primary residence, you're property tax assessment rate will be 6% instead of 4%.
@Al Brennan from a federal/state taxation standpoint, this is hardly an issue. States will grant credits on income taxed in different states, so if your SC rental income ends up being taxed, NC will grant you a credit in the amount of the SC tax in order to avoid double taxation.
That sounds perfectly acceptable to me, I'll have to delve a bit deeper to make sure there are no hidden tax penalties, but a 6% opposed to 4% is ok to me.
I live in the Upstate and have started investing out of state because of the property taxes. For example I was looking at renting out my primary residence. If I did my taxes would have jumped from around $1,200 to somewhere around $2,500-$2,800. With the rate that property values are (at least in my area), you need to purchase properties at a significant discount. In many areas you can't even find a rent ratio of 1% buying a rent ready unit.