What special abandoned-building credit rules did SC Revenue Ruling 15-12 provide for formerly state-owned properties?

Plain-English summary

South Carolina Revenue Ruling 15-12 added special 2015 guidance for formerly state-owned abandoned buildings to the general credit rules then described in RR 15-7.

It is historical only. RR 26-1 expressly superseded both RR 15-7 and RR 15-12 after later statutory changes.

Former state-owned-building definition

The ruling defined a state-owned abandoned building as either one abandoned building with its ancillary service buildings or a project of one or more abandoned buildings whose aggregate size exceeded 50,000 square feet.

The property had to have been abandoned for more than five years and, immediately before the taxpayer's acquisition, most recently owned by South Carolina or a state agency, instrumentality, or political subdivision. Entities under common control or ownership with the taxpayer were included when applying the acquisition rule.

Local certification

A taxpayer could apply to the municipality or county for an ordinance or binding resolution certifying the building's status and geographic area. The taxpayer could conclusively rely on the certification if a copy accompanied the first return claiming the credit.

The ruling placed the burden on the taxpayer to prove the number of buildings in a multi-building project unless the relevant certification resolved the qualifying facts.

One building versus a project

One state-owned abandoned building and its ancillary service buildings were treated as one abandoned building. The old general rules then applied to that building, including income-producing use, the Notice of Intent, minimum rehabilitation spending, and the credit calculation.

For a project containing two or more qualifying state-owned abandoned buildings, each building could be a separate abandoned building eligible for a credit. Each one had to independently satisfy the old general requirements, including its own Notice of Intent and minimum rehabilitation expense.

Units within a building

A building could be divided into qualifying units based on the substance of the redevelopment. Under the ruling's examples:

• separate apartments within one apartment building could not each be their own unit because a single-family residence did not qualify;
• commercial space and a multi-family residential portion could potentially be separate units;
• distinct retail stores separated by firewalls and having separate street access, utilities, and HVAC could potentially be separate units; and
• a hotel was eligible for only one credit.

Each recognized unit needed to satisfy the old minimum expense, notice, estimate, purpose, and eligibility rules. Under the superseded framework, each qualifying unit could have its own income credit subject to the old $500,000 limit.

Common questions

Q: Did a project with three qualifying state-owned buildings receive only one credit?

A: Not necessarily. The ruling allowed each building in a qualifying multi-building project to be treated as a separate abandoned building site.

Q: Could every apartment be treated as a separate unit?

A: No. The ruling said the single-family residence exclusion prevented that result.

Q: Was local certification mandatory?

A: The ruling said the taxpayer could apply for certification and conclusively rely on it if included with the first credit return; otherwise the taxpayer retained the burden of proving qualification.

Q: Is RR 15-12 current guidance?

A: No. RR 26-1 expressly superseded it.

Citations and references

• S.C. Code Ann. Chapter 67 of Title 12 (Abandoned Buildings Revitalization Act)
• S.C. Code Section 12-67-120(8) (historical state-owned abandoned building definition)
• S.C. Code Section 12-67-160 (local certification)
• S.C. Code Section 12-67-130(B) (single-family residence exclusion cited in the examples)
• 2015 Act No. 68 (amendments addressed by the ruling)
• SC Revenue Ruling #26-1 (current superseding guidance identified in the corpus)

Subject

Abandoned Building Revitalization Credit – Additional Rules for State-Owned Abandoned Buildings

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR15-12.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #15-12

SUBJECT:

Abandoned Building Revitalization Credit – Additional Rules for
State-Owned Abandoned Buildings
(Income and Property Taxes)

EFFECTIVE DATE: Rehabilitation, renovation, and redevelopment of state-owned
abandoned buildings placed in service on or after June 9, 2015.
REPEAL DATE:

December 31, 2019

REFERENCES:

Chapter 67 of Title 12 (Supp. 2014)
2015 Act No. 68
SC Revenue Ruling #15-7

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the
public. It is an advisory opinion issued to apply principles of tax
law to a set of facts or a general category of taxpayers. It is the
Department’s position until superseded or modified by a change in
statute, regulation, court decision, or another Department advisory
opinion.

I.

INTRODUCTION

The Abandoned Building Revitalization Act of 2013 (Act) was enacted in Title 12,
Chapter 67, to create an incentive for the rehabilitation, renovation, and redevelopment of
abandoned buildings in South Carolina. The Act provides that restoration of abandoned
buildings into productive assets for the communities in which they are located serves a
public and corporate purpose and results in job opportunities. On July 8, 2015, the
Department issued SC Revenue Ruling #15-7 to provide guidance regarding the basic
credit principles applicable under the Act. 1

1

See also SC Information Letter #15-9 for a summary of the credit requirements.
1

In 2015, the General Assembly amended the Act to provide a definition of “state-owned
abandoned building,” and to provide the manner in which a taxpayer may apply to obtain
certification of a state-owned abandoned building site by a county or municipality. 2 The
purpose of this advisory opinion is to provide guidance on the new rules applicable to
state-owned abandoned buildings and discuss how the basic credit principles under SC
Revenue Ruling #15-7 continue to apply to state-owned abandoned buildings. Except as
otherwise provided in this advisory opinion, the general credit principles under SC
Revenue Ruling #15-7 remain applicable to state-owned abandoned buildings.

II.

DISCUSSION
A.

Definition of “State-Owned Abandoned Building” Under Code
Section 12-67-120(8)

Act No. 68 added Code Section 12-67-120(8) to provide for the statutory definition of
“state-owned abandoned building.” Code Section 12-67-120(8) provides:
“State-owned abandoned building” means an abandoned
building and its ancillary service buildings or a project
consisting of one or more abandoned buildings, the aggregate
size of which is greater than fifty thousand square feet, that
has been abandoned for more than five years, and, prior to the
taxpayer’s acquisition of such building, was most recently
owned by the State, or an agency, instrumentality, or political
subdivision of the State. For purposes of this definition, the
taxpayer shall include any entity under common control or
common ownership with the taxpayer.

B.

Certification of Abandoned Building Site or State-Owned
Abandoned Building Site Under Code Section 12-67-160

Act No. 68 also added Code Section 12-67-160, which provides for the manner in which
a taxpayer may apply to obtain certification of an abandoned building site, or state-owned
abandoned building site, by the municipality or county in which the abandoned building
is located. Code Section 12-67-160 provides:

2

2015 Act No. 68, Sections 2 and 4. The Act also provided for several other generally applicable
changes to Title 12, Chapter 67, including shortening the income tax credit installment period from 5
years to 3 years, eliminating the 50% income tax credit installment limitation, and providing that the
income tax credit may be taken against insurance premium taxes. 2015 Act No. 68, Section 3. See
SC Revenue Ruling #15-7 for discussion of these other amendments to Title 12, Chapter 67.
2

(A) Notwithstanding any other provision of law, the taxpayer
may apply to the municipality or county in which the
abandoned building is located for a certification of the
abandoned building site made by ordinance or binding
resolution of the governing body of the municipality or
county. The certification must include findings that the:
(1) abandoned building site was an abandoned building
as defined in Section 12-67-120(1); and
(2) geographic area of the abandoned building site is
consistent with Section 12-67-120(2).
(B) The taxpayer may apply to the municipality or county in
which the state-owned abandoned building is located for a
certification of the state-owned abandoned building site made
by ordinance or binding resolution of the governing body of
the municipality or county. The certification must include the
findings that the:
(1) state-owned abandoned building site was a stateowned abandoned building as defined in Section 12-67120(8); and
(2) geographic area of the state-owned abandoned
building site is consistent with Section 12-67-120(8).
(C) The taxpayer conclusively may rely upon the certification
in determining the credit allowed; provided, however, that if
the taxpayer is relying upon the certification, the taxpayer
shall include a copy of the certification on the first return for
which the credit is claimed.

C.

Application of Code Sections 12-67-120(8) and 12-67-160

Code Section 12-67-120(8) was added to provide for specific treatment of building sites
that involve either (1) a single state-owned abandoned building and its ancillary service
buildings or (2) projects consisting of multiple state-owned abandoned buildings with an
aggregate size greater than 50,000 square feet. All state-owned abandoned buildings must
have been abandoned for more than five years, and most recently have been owned by the
State (or an agency, instrumentality, or political subdivision of the State) prior to
acquisition by the taxpayer.
3

In the interpretation of a statute, the legislature will be presumed to have inserted every
part thereof for a purpose. As a general rule, a statute should be construed so that effect
is given to all its provisions so that no part will be inoperative or superfluous, void or
insignificant. It should not be presumed that any provision of a statute is redundant. A
statute should not be construed in such a manner as to render it partly ineffective or
inefficient if another construction will make it effective. 73 Am. Jur. 2d Statutes § 156.
Based on the above, the Department’s position concerning state-owned abandoned
buildings is as follows: Where a state-owned abandoned building consists of one
abandoned building and its ancillary service buildings, the abandoned building and
ancillary service buildings are considered to be one abandoned building. General credit
principles under SC Revenue Ruling #15-7 apply to the abandoned building – e.g., the
abandoned building must be put into operation for income producing purposes and meet
the purpose of the Act, 3 the taxpayer must file a Notice of Intent to Rehabilitate for the
abandoned building before incurring any rehabilitation expenses at the site, 4 the
abandoned building site must meet the minimum rehabilitation expense requirement of
over $75,000 - $250,000 based on location, 5 etc.
Where a building site is a project consisting of two or more state-owned abandoned
buildings, each abandoned building that is part of the project may be considered an
abandoned building eligible for the credit. The taxpayer has the burden of proving the
number of state-owned abandoned buildings in a project. General credit principles under
SC Revenue Ruling #15-7 apply to each abandoned building – e.g., each abandoned
building must be put into operation for income producing purposes and meet the purpose
of the Act, the taxpayer must file a Notice of Intent to Rehabilitate for each abandoned
building before incurring any rehabilitation expenses at the site, each abandoned building
site must meet the minimum rehabilitation expense requirement of over $75,000 $250,000 based on location, etc.
Under the general credit principles of the Act, a state-owned abandoned building can be
subdivided into separate units. Whether separate units of a building qualify as an
abandoned building is based on the substance (rather than the form) of the
redevelopment. This determination depends on the specific facts of each redevelopment. 6
Code Section 12-67-160(B) was added to provide that for a state-owned abandoned
building placed in service on or after June 9, 2015, the taxpayer may apply to the county
or municipality in which the building is located for certification that the building is a
state-owned abandoned building, as defined in Code Section 12-67-120(8), that has been
abandoned for at least five years. The taxpayer may conclusively rely on this
certification. A copy must be included with the first tax return for which the credit is
claimed.
3

See SC Revenue Ruling #15-7, Question 4.
See SC Revenue Ruling #15-7, Question 12.
5
See SC Revenue Ruling #15-7, Question 6.
6
See SC Revenue Ruling #15-7, Questions 2 and 8.
4
4

III.

EXAMPLES 7

A. One State-Owned Abandoned Building. Taxpayer acquires a three-story state-owned
abandoned building consisting of one abandoned building and its ancillary service
buildings. The taxpayer intends to rehabilitate the building into an apartment complex
with three residential apartments on each floor.
The abandoned building and ancillary service buildings are considered to be one
abandoned building site eligible for one credit. General credit principles under SC
Revenue Ruling #15-7 apply to the abandoned building site. The abandoned building site
must be put into operation for income producing purposes and meet the purpose of the
Act, the taxpayer must file a Notice of Intent to Rehabilitate for the abandoned building
site before incurring any rehabilitation expenses at the site, etc. Each planned residential
apartment cannot be a separate unit because a single family residence does not qualify
under the Act pursuant to Code Section 12-67-130(B) and SC Revenue Ruling #15-7. 8
B. One State-Owned Abandoned Building with Multiple Units. Taxpayer acquires a
three-story state-owned abandoned building consisting of one abandoned building and its
ancillary service buildings. The taxpayer will rehabilitate Floor 1 as a retail store and
rehabilitate Floors 2 and 3 as residential apartments.
The abandoned building and ancillary buildings are considered to be one abandoned
building site eligible for the credit. General credit principles under SC Revenue Ruling

15-7 apply to the abandoned building site. The taxpayer may choose to treat the entire

building as one abandoned building site, or as multiple units (one commercial unit and
one multi-family residential unit). If the building is subdivided into units, each of the two
units must meet the minimum rehabilitation expense requirement (i.e., over $75,000 $250,000 based on location population), each unit must file a separate Notice of Intent,
and each unit must report an estimated rehabilitation expense in its Notice of Intent. If
each unit meets the purpose and requirements of the Act, then each is eligible for an
income tax credit not to exceed $500,000. See SC Revenue Ruling #15-7, Question 8.
Again, each planned residential apartment cannot be a separate unit because a single
family residence does not qualify under the Act pursuant to Code Section 12-67-130(B)
and SC Revenue Ruling #15-7.

7

For purposes of these examples, it is assumed that the taxpayer has either obtained certification
from the municipality or county that each building is a state-owned abandoned building that has been
abandoned for at least five years, or has otherwise met the burden of proving that the building
qualifies as a state-owned abandoned building that has been abandoned for at least five years.
8
See SC Revenue Ruling #15-7, Question 8.
5

C. Project Consisting of Multiple State-Owned Abandoned Buildings. Taxpayer
acquires a parcel consisting of three separate state-owned abandoned buildings with an
aggregate square footage exceeding 50,000 square feet. The taxpayer intends to develop
a residential apartment complex by rehabilitating each building to contain 20 residential
apartments, each with its own separate entrance, kitchen, bath and utilities.
Provided that other applicable requirements are met, each state-owned abandoned
building is considered to be an abandoned building site eligible for a credit. 9 General
credit principles under SC Revenue Ruling #15-7 apply to each abandoned building site.
Each abandoned building site must be put into operation for income producing purposes
and meet the purpose of the Act, the taxpayer must file a Notice of Intent to Rehabilitate
for each abandoned building site before incurring any rehabilitation expenses at the site,
etc. Again, each planned residential apartment cannot be a separate unit because a single
family residence does not qualify under the Act pursuant to Code Section 12-67-130(B)
and SC Revenue Ruling #15-7.
D. Project Consisting of Multiple State-Owned Abandoned Buildings with Multiple
Units. Taxpayer acquires a parcel consisting of three separate state-owned abandoned
buildings with an aggregate square footage exceeding 50,000 square feet. The taxpayer
will rehabilitate the project as follows:
• Building 1 will be developed into a hotel.
• Building 2 will be developed into a restaurant on Floor 1, a banquet room for the
restaurant on Floor 2, and professional office spaces on Floor 3 accessed by a
separate side entrance.
• Building 3 will be developed into four separate retail stores. Each store is totally
separated from the others by a firewall, each has direct access to the street, and
each has separate utilities and HVAC systems. 10
Provided that other applicable requirements are met, each state-owned abandoned
building is considered to be an abandoned building site eligible for the credit. General
credit principles under SC Revenue Ruling #15-7 apply to each abandoned building site.

9

This example is intended to illustrate the special rule for a project consisting of multiple stateowned abandoned buildings – i.e., each abandoned building that is part of the project is eligible for
the credit. The result would be different for similar rehabilitation involving non-state-owned
abandoned buildings. In that scenario the taxpayer would be eligible for only one credit. See SC
Revenue Ruling #15-7, Question 8 (A multi-family residential complex is one economic unit and one
abandoned building site).
10
See SC Revenue Ruling #15-7, Question 8 and Example E.
6

Building 1, the hotel, is eligible for only one credit. 11 The taxpayer may choose to treat
Building 2 as one abandoned building site, or as multiple units (Floors 1 and 2 being one
unit and Floor 3 being the second unit), and the taxpayer may choose to treat Building 3
as multiple units (e.g. each retail store being a separate unit).
If a building is subdivided into units, each unit must meet the minimum rehabilitation
expense requirement (i.e., over $75,000 - $250,000 based on location population), each
unit must file a separate Notice of Intent, and each unit must report an estimated
rehabilitation expense in its Notice of Intent. If each unit meets the purpose and
requirements of the Act, then each unit is eligible for an income tax credit not to exceed
$500,000. 12
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reames III
Rick Reames III, Director
October 15
, 2015
Columbia, South Carolina

11
12

See SC Revenue Ruling #15-7, Question 8.
See SC Revenue Ruling #15-7, Question 8.
7