Question

5) A friend of yours is beginning a new career - they intend to acquire a home and stay in their position for a number of years. The company that they will work for has offered your friend a position in either the companies Greenville or Hendersonville offices. Focusing only on taxes, explain to your friend what State and Local Taxes they will need to consider? Also, provide a sense as to which location will be higher or lower for each type of tax based on a review of the localities taxes on the Web.

Answer 1

When a home is bought in Greenville then the state taxes as applicable in the state of South Carolina will be applicable. South Carolina has some of the lowest property tax rates in USA and the average effective property tax rate in the state is just 0.57%. Buying a house in the state will give you the benefit of a lower assessment rate to which owner occupied residences are subjected to. Homeowners in South Carolina pay annual property taxes based on the assessed value of their property and on their local tax rate. Assessed value is generally a percentage of the market value. Another good thing about the state that works in favor of home owners is that increases in market value is considered for tax purposes but the increase is capped at 15%. The average effective property tax rate in Greenville is 0.69%.

Hendersonville is in North Carolina. The state and local tax rates for a home owner are low in North Carolina as well but it is higher than South Carolina’s rates. The average effective tax rates in North Carolina are 0.86% compared to the rate of 0.57% for South Carolina and 0.69% for Greenville.

In a contrast to South Carolina’s property taxes the taxes in North Carolina is ‘ad valorem’. This means that the tax is based on the value of the property. The good thing about the state is that it does not have any state property tax; it just has taxes that are imposed by the local governments. Given the absence of state taxes the average effective property tax rate in Hendersonville comes out to be 0.60% (0.09% lower compared to Greenville).

Considering the above facts I will recommend my friend to acquire a home and work for the company’s Hendersonville office. This will help them to pay a lower amount of property taxes.