COLUMBIA — Enterprising homeowners in key locations might dodge a new tax.
Rep. Bill Hixon, R-North Augusta, is trying to save people who rent their homes out for fewer than 15 days from paying a 2 percent to 5 percent accommodations tax on what they collect.
The tax applies to people who rent out their primary home, for which they pay a 4 percent rate.
The bill, which cleared the state House unanimously Thursday, applies to all South Carolina homeowners but specifically mentions those on the coast or across the Savannah River from the Masters Tournament.
The proposal, H. 3767, is projected to decrease state revenue by $2 million, but Hixon said the figure is misleading because most property owners have yet to pay the tax his bill aims to eliminate.
Hixon said a state Department of Revenue official left a message assuring him that he wouldn’t be sending any letters to property owners directing them to pay the accommodations tax. Hixon wants to make sure it stays that way.
“There could be another (revenue department) administration or person at the head who could decide to go after it, because the law is so vaguely worded,” Hixon said.
The Masters Housing Bureau, a joint venture of Augusta National Golf Club and the Augusta Metro Chamber of Commerce, found that homes for rent are priced at $2,000 for an apartment and more than $15,000 for a house. It found that an “average,” four-bedroom, three-bathroom home rents for $8,500 per week. South Carolina properties account for 20 percent of its rental listings.
Exempting those 272 private homes in South Carolina, which were largely in North Augusta and Aiken, would reduce state collections by $152,000.
At least twice as many additional listings for apartments, condos, and townhouses might be advertised. Exempting these 544 smaller homes, which go for an average of $2,500 per week, would decrease state tax revenue by about $95,000.
Hixon’s proposal would give coastal homeowners a break, too.
“I’m not trying to be selfish for North Augusta,” he said. “I’m writing this for all South Carolinians who rent their house out, whether in Aiken for the horse races or Charleston for the Spoleto (Festival).”
The Board of Economic Advisors’ fiscal impact analysis identified 5,185 private coastal homes that beckon vacationers during beach season. Weekly rental rates ranged from $1,295 to several thousand dollars.
The proposal now awaits Senate committee review, having easily cleared the House chamber before the May 1 Crossover Day deadline.