Tax Law Insights

South Carolina assesses a recording fee on deeds to real property. The South Carolina deed recording fee is imposed for "the privilege of recording a deed," and is based on the transfer of real property from one person or business entity to another. The fee is generally imposed on the grantor of the real property, although the grantee may be secondarily liable for the fee. There are specific instances where the grantee, and not the grantor, is directly accountable.

This fee is composed of two fees - a state fee of $1.30 for every $500, or fractional part of $500, of the real property's value and a county fee of fifty-five cents for every $500, or fractional part of $500, of the property's value. The fee is collected at the county level, by the county clerk of court or register of deeds, and which remits the state portion of the fee to the Department of Revenue on a monthly basis.

The South Carolina Department of Revenue has issued comprehensive administrative guidance on the deed recording fee in SC Revenue Ruling #17-5. This new ruling is 39 pages and is delivered in a readable "Question and Answer" format.

SC Revenue Ruling #17-5 provides guidance from SCDOR on a broad variety of issues involving the deed recording fee, including:

• The value to be used in computing the fee
• Whether value must include the provision of services, forgiveness of debt, and other items
• Exceptions, exemptions, and deductions
• Transfers to/from corporations, partnerships, and their owners
• Deeds to/from limited liability companies, and their members, and including deeds involving real property of a "single member LLC" which is treated as a "disregarded entity" for tax purposes
• Gift transfers
• Deeds among family members, including transfers to a former spouse
• Charitable deeds, including deeds of conservation property and transfers of conservation easements
• Deeds to/from an estate, and to/from a trust, and the related beneficiaries
• Master-in-Equity and foreclosure sale deeds
• Deeds transferring real property through bankruptcy proceedings
• Federal, state, and local government deeds
• Deeds to property in connection with an IRC Section 1031 exchange transaction
• Agent-principal transfers
• Applicability of the deed recording fee to transactions where an IRC Section 338(h)(10) election has been made

Anyone or any business entity selling or otherwise transferring real property in South Carolina, and where a deed to the property must be recorded, must consult this new guidance issued by SCDOR. This guidance from SCDOR does not answer all questions applicable to the deed recording fee, but it indeed provides welcome administrative clarity to areas involving the deed recording fee and its application to specific transactions.