A BILL TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 12-37-220, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO PROVIDE THAT THE EXEMPTION FOR CERTAIN PROPERTY OF A NONPROFIT HOUSING CORPORATION ONLY APPLIES TO THE PERCENTAGE OF PROPERTY THAT EQUALS THE CORPORATION'S OWNERSHIP INTEREST IN THE PROPERTY, TO PROVIDE AN EXCEPTION, AND TO PROVIDE CERTAIN CERTIFICATION AND NOTICE REQUIREMENTS.
H4475 amends South Carolina’s property tax exemption rules for certain nonprofit housing corporations. The bill keeps the existing exemptions for nonprofit housing devoted to below-cost housing for elderly persons, persons with disabilities, and low- or moderate-income residents, but narrows the exemption for projects under Section 12-37-220(B)(11)(e) so that it generally applies only in proportion to the nonprofit corporation’s direct or indirect ownership interest in the qualifying property. In some cases, the exemption may still reach 100 percent, including where the nonprofit’s ownership interest exceeds 50 percent or where all units are devoted to qualifying low-income residents, subject to a special income standard in certain large metropolitan areas using Small Area Fair Market Rents.
The bill also creates new administrative requirements for claiming the exemption. Nonprofit housing corporations or their instrumentalities must apply to the Department of Revenue, certify ownership percentages, and submit rent rolls or other documentation showing compliance with IRS Revenue Procedure 96-32. Initial certification must be filed by the first penalty date for the tax year in which the exemption is first claimed, and annual certifications are required by October 1 each year thereafter. The department is directed to set the application forms and penalties for noncompliance, and it must notify county and municipal officials within 60 days after approving an exemption.
The bill’s impact on state law is to tighten and clarify how the nonprofit housing property tax exemption is calculated, especially for properties with mixed or partial ownership structures. It preserves tax relief for qualifying affordable housing projects but limits the exemption to the nonprofit’s ownership share unless a statutory exception applies. It also adds ongoing reporting and local-notice requirements, which could improve oversight and reduce disputes over eligibility.
The general sentiment reflected by the bill text is supportive of affordable housing while aiming to prevent overbroad tax exemptions. Because there are no committee transcripts or recorded votes provided, there is no direct evidence of partisan or stakeholder debate in the available materials. The structure of the bill suggests an effort to balance continued tax benefits for nonprofit housing providers with tighter accountability and clearer administration.
The main point of potential contention is the proportional-exemption rule and the added compliance burden. Nonprofit housing organizations may view the new ownership-based limitation and annual certification requirements as administratively burdensome or as reducing the value of existing tax relief for joint-venture or layered ownership projects. Local governments, by contrast, may favor the bill because it narrows exemptions and improves notice and documentation, which could help protect the tax base and make exempt properties easier to track.
H4475 amends Section 12-37-220 of the South Carolina Code to change how the property tax exemption for certain nonprofit housing corporations is applied. For qualifying low-income housing projects, the exemption is generally limited to the nonprofit corporation’s direct or indirect ownership percentage in the property, with exceptions that can allow a full exemption in specified circumstances. The bill also imposes application, certification, annual reporting, and local-notification requirements, and it applies prospectively to new exemption applications for property tax years beginning after 2026, while grandfathering existing approved or pending projects under the current exemption rules.
No committee transcripts or votes were provided, so there is no recorded floor or committee sentiment to summarize. Based on the bill language alone, the measure appears to have a generally pro-housing, pro-accountability orientation: it preserves exemptions for nonprofit affordable housing while tightening eligibility and documentation rules. The absence of recorded opposition or support in the provided materials means any broader political sentiment cannot be determined from the available record.
The likely areas of contention are the proportional limitation on the exemption, the special treatment for projects in certain large metropolitan areas, and the new compliance obligations. Nonprofit housing providers may object that the bill reduces tax relief for projects with partial ownership structures and adds recurring paperwork and administrative costs. Local governments and tax administrators may support the bill’s narrower exemption and notice provisions because they improve transparency, but they could also scrutinize the special exceptions and the Department of Revenue’s implementation burden.