The Hidden Costs of Renting Out Your South Carolina Home

Destination: Fort Mill

It’s no secret that people are flocking to Fort Mill from all over the country. According to the U.S. Census Bureau, Fort Mill ranked 13^th nationally in growth for all municipalities with 20,000 or more people. It’s not hard to see why; with the subtropical climate, friendly people, ample outdoor activities and proximity to Charlotte, Fort Mill is a wonderful place in which to plant roots.

One might conclude, based on the sheer popularity of the area and apparent consensus of this being the “it” place to live, there would be an abundance of homes to rent. After all, moving from out of state is a huge undertaking, and buying a house before you scout the neighborhoods and figure out which area feels like “home” can be a daunting task. It seems as if owning a rental property would be a surefire hit for any aspiring real estate investor.

However, a quick Zillow search reveals the reality: There are currently 48 homes available to rent in Fort Mill but why so few?

Tax Implications of Owning a Rental Property in South Carolina

One of the biggest factors to look at when breaking down the low inventory of single-family homes to rent in the Palmetto state is how these properties are taxed.

There are two ways homes are taxed in South Carolina – (1) primary (owner-occupied) residences, which are taxed at a 4% rate and (2) Investment properties, which are taxed at a 6% rate. Investment homes are also hit with an increased millage, which results in a higher tax burden. A few percentage points might not seem like a lot but here is a real-world example.

You own a $500,000 home in Tega Cay, SC; a beautiful area of Fort Mill, and you’re considering options for the future. To maintain your current lifestyle and build generational wealth, you’re exploring the scenario of converting your primary residence to rental property. Let’s look at what your tax bill would be for each scenario:

Primary Residence:

$500,000 x 0.04 = 20,000 x .2375 (Tega Cay millage for primary residence) = $4,750 a year in taxes

Investment Property:

$500,000 x 0.06 = 30,000 x .533 (Tega Cay millage for investment properties) = $15,990 a year in taxes

So now, that same home you’ve been living in and paying $4,750 in taxes will now cost you a whopping $11,240 a year more in taxes.  Said differently, it means you’ll need to increase the rental rate by $1,332.50 per month to net nothing on your “investment property” for just the taxes.  Once presented with this scenario, many homeowners make the decision to sell, rather than hang onto the property.

This inevitably creates a shortage.  However, this shortage in rental homes in South Carolina presents a challenge for those people looking for a quick move without the long-term commitment of buying. Until now, their options were limited.

Lodges at Fort Mill – A Whole New Way to Live

Lodges at Fort Mill is trailblazing a whole new way to live and rent in Fort Mill. It is the only community of its kind in the area that offers new construction, single-family homes available to rent. A total of 58 single family homes are currently in the pre-leasing stage: each with high-end design finishes, quartz countertops, 10-foot ceilings and a host of other luxe details. The units range from 1,328 square feet with two bedrooms and two baths, to 1,436 square feet with three bedrooms and two baths. Each unit boasts a detached, one-car garage, along with yard space and beautiful landscaping.  There’s no better way to feel settled in a lovely home without the inherent stress of purchasing. The maintenance-free lifestyle allows for a zero-stress experience and more time to revel in the modern amenities like pool, spa, sauna, walking trails and more.  

In building this one-of-a-kind community, Northwood Ravin (a leader in multifamily housing development, construction, and property management in the Southeast) hopes to provide a whole new way to experience Fort Mill and its southern charm.

For more information, or to browse the available floorplans and units, please visit www.lodgesfortmill.com.