South Carolina Textiles Communities Revitalization Act
The original law (Sections 6-32-20 to 6-32-50) went into effect on May 11, 2004, and the replacement law (Sections 12-65-10 to 12-65-45) went into effect June 12, 2008.
From early water-powered mills to large mills with their own self-contained villages, the manufacturing of textiles is an important chapter in the history of South Carolina. But technological and economic forces have put many of these facilities out of work, leaving communities today to struggle with the negative consequences of their abandonment. Putting these buildings back into productive use will benefit the communities and save a tangible part of our history.
This law provides financial incentives for the "rehabilitation, renovation, and redevelopment of abandoned textile mill sites located in South Carolina." This information sheet is intended to highlight key provisions of the law; it is not tax advice. Taxpayers are urged to consult their tax advisor about how the law applies to their tax situation.
What properties are eligible?
The new law provides different provisions for properties purchased on or before December 31, 2007 and those purchased on or after January 1, 2008. Please see these provisions in the law. An eligible textile mill site is defined in the new law as the “textile mill together with the land and other improvements on it which were used directly for textile manufacturing operations or ancillary uses. However, the area of the site is limited to the land located within the boundaries where the textile manufacturing, dying, or finishing facility structure is located and does not include land located outside the boundaries of the structure or devoted to ancillary uses." Abandoned is defined as "at least eighty percent of the textile mill has been closed continuously to business or otherwise nonoperational as a textile mill for a period of at least one year immediately preceding the date on which the taxpayer files a 'Notice of Intent to Rehabilitate'".
What is the incentive?
The law offers two types of credit options:
• 25% credit against real property taxes, or
• 25% state income tax or corporate license fee credit
Both credits are calculated on rehabilitation expenses, which are "expenses or capital expenditures incurred in the rehabilitation, renovation, or redevelopment of the textile mill site." The credits are based on the final costs, which must fall within eighty and one hundred-twenty percent of the estimate of the rehabilitation expenses provided in the “Notice of Intent to Rehabilitate.” Rehabilitation expenses below eighty percent are not eligible for these credits and rehabilitation expenses above one hundred-twenty percent are not included in the calculation of the credit.
Properties that qualify for the state historic tax credit for rehabilitation can also take advantage of this incentive. (SC Code of Laws, Section 12-6-3535 allows a 10% state income tax credit for properties qualifying for the 20% federal income tax credit for the rehabilitation of historic income-producing properties.)
What is the process to qualify?
A “Notice of Intent to Rehabilitate” is required. Please see the steps outlined in the law.
To receive the property tax credit, the law outlines a process by which the municipality and other local taxing entities must approve the incentive. Please see the steps outlined in the law (Section 12-65-30(B)).
To receive the credit against income tax or corporate license fees, the law outlines a process by which the SC Department of Revenue must approve the incentive. Please see the steps outlined in the law (Section 12-65-30(C)).
The law does not require review of the project work. However, if a project is pursuing the historic rehabilitation tax credits (both federal and state), the project must follow the review and approval process required for those credits. Please contact the State Historic Preservation Office (SHPO) at the SC Department of Archives and History for more information early in the planning process 803-896-6174.
How are the credits used?
The law specifies time frames and limits on how each credit can be used:
The property tax credit can be taken as a credit against up to seventy-five percent of the real property taxes due on the textile mill site each year for up to eight years.
The state income tax or corporate license fee credit must be taken in equal installments over a 5 year period, beginning when the property is placed in service. Any unused portion of a credit installment may be carried forward for the succeeding five years. The new law limits the use of this credit to fifty percent of the taxpayer’s state income tax liability or corporate license fees.
The state income tax credit earned by a general partnership, limited partnership, limited liability company or other entity taxed as a partnership must be passed through to its partners, and may be allocated among any of its partners, including allocation of the entire credit to one partner, in a manner agreed upon by the partners.
The credit may be passed through to lessees or purchasers of the property. See Section 12-65-30(C)(6) for more information.
The credit does not offset the 10% state historic credit.
This website does not provide legal, tax or accounting advice; the information provided is intended to be general in nature; and visitors to the website are strongly encouraged to consult their own professional tax, accounting and legal advisors on individual tax matters, or consult the SC Department of Revenue or the Internal Revenue Service (IRS). The SHPO is not responsible for the information or advice provided here as it may affect the specific tax consequences to any individual (including sole proprietor), corporate, partnership, estate or trust taxpayer, which will depend on many other facts and circumstances. The information is for the general benefit of persons interested in obtaining certifications from the SHPO that may allow them to qualify for federal and/or state historic income tax credits. Given the frequency of changes in federal and state tax laws, regulations and guidance, the information represents a good faith effort to reference controlling laws and regulations as accurately as possible.