An ongoing goal of this column is to make South Carolina taxpayers aware of some of the state’s little-known tax breaks and incentives that can save regular folks some money.
The good news is that increasing numbers of people have been saving money by claiming tax credits and incentive funds publicized here. The bad news is, one state program that can save folks lots of money received so many applications since I wrote about it last summer that it has twice stopped accepting new applications.
The S.C. Department of Insurance’s Safe Home program helps Lowcountry homeowners pay for new roofs and other improvements that make homes less vulnerable to hurricane damage. Available in the tri-county area and most other Lowcountry counties to anyone with a single-family home worth $300,000 or less — with grants of up to $5,000 and tax credits on top of that — it’s no wonder there’s been a surge in applications now that more people know the program exists.
I know Safe Home is a big money-saver, because I was one of the successful applicants last year. And I know my column about the program in June 2014 resulted in lots of applications, because more than 120 people called me with questions.
The program has been around since 2007, but last fall was the first time the DOI stopped taking applications. The department gets a limited amount of money for the program each year, about $2 million, funded by a small fraction of the state’s tax on insurance policies, and the department tries to not take more applications than can be funded in a year.
So, on March 1 the Safe Home program resumed taking applications. By the end of June, 599 applications had been filed, and the DOI again put a freeze on new applications.
South Carolina’s budget year, with the annual funding for Safe Home, runs July 1 to June 30. The Department of Insurance told me it can’t estimate when more applications will be accepted.
The best course for people who are interested in the program is to become familiar with the rules, and be ready to quickly apply when applications are accepted again.
The main rules are that you must own and reside in a single-family detached home (but not a mobile home) in a county covered by the program, with a taxable and insured valued of no more than $300,000. You apply by having a certified wind inspector complete a report, which costs $150. (Find the names of certified wind inspectors on the DOI’s Safe Home web page, doi.sc.gov or call 803-737-6087).
Safe Home is not the only state program or tax incentive with limited yearly funding, or a limited duration. Some of these incentives and tax breaks pop up and then vanish before you can get them, like the plastic critters in a Whac-a-Mole game.
The state’s Palmetto Heroes program, which offered incentives to first-time homebuyers in certain professions, such as firefighters and nurses, closed in June. The Mortgage Credit Certificate program, which allowed homebuyers to claim an annual tax credit equal to 30 percent of their mortgage interest payments, up to $2,000, was suspended earlier this year but is expected to return with changes. (Those who already have an MCC are not affected by the change).
However, there are plenty of other incentives that don’t have funding constraints, and could be saving lots of people money if they were better known. Buyers of new hybrid vehicles, for example, rarely claim the state’s “alternative motor vehicle credit” because it’s little-known and the state has made it very difficult to figure out, but it’s worth $600 if you buy a Prius, for example.
One of my favorite state tax breaks to publicize for coastal homeowners is the excess insurance premium credit. This is a South Carolina income-tax credit for homeowners who are spending more than 5 percent of their income to insure their home. The tax credit is worth up to $1,250 off your income tax bill, and is claimed on your South Carolina income-tax return using form TC44.
In 2008, just over 500 people claimed that tax credit. Five years (and several mentions in this column) later, more than 3,000 people claimed the tax credit in 2013 and reduced their state income-tax bills by more than $3 million.