CLOSING DETAILS

A warehouse is owned by a Pennsylvania corporation and recently sold for a capital gain of $200,000. The nonresident withholding tax is A) $12,000. B) zero because it is owned by an out-of-state firm. C) $24,000. D) $10,000.

The answer is $10,000. $200,000 × 0.05 = $10,000.

An owner of a residential property in South Carolina would like to sell for a capital gain of $300,000. She is a resident of Miami, Florida. At the closing, what amount, if any, will be withheld for nonresident withholding tax? A) $30,000 B) $15,000 C) Zero because she lives in Florida D) $21,000

The answer is $21,000. $300,000 × 0.07 = $21,000.

A property sold for $100,000. As part of the settlement, doc stamps were purchased. What would the settlement sheet show for that debit? A) $370 B) $270 C) $320 D) $200

The answer is $370. $100,000/500 = 200; $200 × 1.85 = $370. Whichever side pays out makes it a debit.

A seller from a reciprocity state with South Carolina wishes to sell his property in South Carolina. At the closing, his attorney withholds $28,000 from the sale as nonresident withholding. How much was the capital gain? A) $400,000 B) $280,000 C) $500,000 D) $300,000

The answer is $400,000. $28,000 ÷ 0.07 = $400,000. All nonresidents pay 0.07 and reciprocity affiliation makes no difference. The attorney usually handles the withholding.

At closing, the buyer has agreed to pay the deed recording fees as part of the contract of sale. The sales price of the transaction is $250,000. The amount to be collected for the deed stamps is A) $1,850. B) $925. C) $1,225. D) $975.

The answer is $925. $250,000/500 × 1.85 = $925

All properties in South Carolina are assessed at what percentage of appraised value? A) 8% B) 4% C) 10% D) 6%

The answer is 6%. Properties are assessed at 6% of appraised value. With application, however, an owner who uses a property as a primary residence may have the assessment rate on the property reduced to 4%. Agricultural and industrial properties also have their own assessment rates.

The maximum rate of interest on a verbal contract is A) 8%. B) 6%. C) 10%. D) 4%.

The answer is 6%. Under the South Carolina Consumer Protection Code, the maximum rate on an oral contract is 6%.

At settlement, a seller has to pay a commission of 6% sell his home to a buyer. On the settlement sheet, this would be indicated as A) a debit to both the buyer and the seller. B) a credit to the seller. C) a debit to the buyer. D) a debit to the seller.

The answer is a debit to the seller. When one has to pay out anything at settlement, it is a debit on that person's side. In this case, the seller has to pay out a commission to the brokerage to sell the home.

Property taxes to be prorated at closing in South Carolina are based on the property value and are called A) withholding taxes. B) ad valorem taxes. C) assessment-based taxes. D) residence taxes.

The answer is ad valorem taxes. "Ad valorem" literally means to the value. It is the county assessor who determines the appraisal value.

If the use of the property changes from primary residence to rental/investment, the tax rate A) stays the same if the use is changed within 24 months of purchase. B) changes only if the property changes from the primary residence was taxed at 6% before settlement. C) changes as well. D) remains the same if changed within one year of purchase.

The answer is changes as well. Tax rates change with property use.

Actual taxes paid on property in South Carolina are based on A) appraised value, assessment rate, value. B) millage rate, assessment rate, and appraised value. C) market price, assessment rate, age. D) value, assessment, right of survivorship.

The answer is millage rate, assessment rate, and appraised value. The assessment rate differs with the type of property. The millage rate is the amount charged by cities and counties for providing the services covered by real property tax assessments.

The buyer is required to withhold the nonresident tax and transmit it to A) the South Carolina Real Estate Commission. B) the state treasurer. C) the South Carolina Department of Revenue and Taxation. D) the state auditor.

The answer is the South Carolina Department of Revenue and Taxation. Seven percent is to be transmitted for residential; 5% is to be transmitted on commercial

Withholding tax for nonresidents must be transmitted at closing to A) the South Carolina Department of Revenue and Taxation. B) the state auditor. C) the South Carolina Real Estate Commission. D) the state treasurer.

The answer is the South Carolina Department of Revenue and Taxation. Seven percent of the gain is paid by the buyer on residential and 5% of the gain is paid on commercial. Attorneys usually attend to this required withholding at closing.

The millage rate is A) the amount charged by cities and counties for providing services to its citizens. B) the "tax rate" of either 4% or 6%. C) the amount charged on investment properties. D) the same as the assessment rate.

The answer is the amount charged by cities and counties for providing services to its citizens. A mill is 0.001 or 1/1,000 of a dollar of assessed value. Also called the "tax rate," the millage will vary depending on the needs of the particular city and county in which the property is located.

In order to reduce taxes, a homeowner of a primary residence may apply to A) the assessment rate reduced from 8% to 6%. B) the assessment rate reduced by $50,000 if the homeowner is over 55. C) taxes reduced due to being over 62. D) the assessment rate reduced from 6% to 4%.

The answer is the assessment rate reduced from 6% to 4%. The assessment rate differs with the type of property. Properties are assessed at 6% of appraised value. With application, however, an owner who uses the home as a primary residence may apply to have the assessment rate on that particular property reduced from 6% to 4%.

An owner from Pennsylvania is selling a condo in Myrtle Beach to a South Carolina resident. The owner's net gain on the property is $200,000. In this case, A) the seller must ask the closing attorney to remit $14,000. B) the seller is exempt because he is not a South Carolina resident. C) the buyer is required to withhold $14,000. D) the seller must file a South Carolina income tax return and remit $14.000.

The answer is the buyer is required to withhold $14,000. At settlement, the out-of-state tax is 7% of the gain; 7% of $200,000 is $14,000. It is the buyer who must withhold this at settlement, though it is usually done by attorneys.

When calculating the nonresident withholding tax, the tax is on A) the capital gain. B) the contract price less repairs and initial cost. C) the contract price. D) the contract price less any repairs.

The answer is the capital gain. At settlement, a 7% tax on the capital gain is withheld by the buyer or an attorney and sent to the Department of Revenue and Taxation.

Deed recording fees in South Carolina are required on every deed for real property sold. The taxation rate at settlement is calculated on A) the amount of the mortgage. B) the millage rate of the county where the property is situated. C) the capital gain of the owner. D) the sales price of the property.

The answer is the sales price of the property. The taxation rate for the stamps is calculated on the purchase price of the property at a rate of $1.85 per $500 of consideration thereof.

On written contracts where interest rates are expressed, A) there is no maximum rate of interest. B) the usury rate is 10%. C) the Consumer Protection Code does not apply. D) the maximum rate of interest is the standard 6%.

The answer is there is no maximum rate of interest. The South Carolina Consumer Protection Code states that, on written contracts, any rate of interest may be charged. However, the maximum rate that a creditor plans to charge must be registered with the state. Oral contracts have a maximum of 6%.

An owner of a South Carolina property who does not reside in the state but who sells a property in the state is subject at closing to A) withholding tax. B) taxation governed by the owner's state of residence. C) abatement tax. D) only federal income tax.

The answer is withholding tax. At closing, it is the responsibility of buyers to withhold 7% of their capital gain and send it to the Department of Revenue and Taxation.