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What the Latest Abandoned Building Tax Credit Updates Mean for TCM Partners

 

Recent regulatory updates to the Abandoned Building Credit introduce a number of substantive changes that will affect how rehabilitation projects are evaluated and structured across South Carolina. For developers and their advisors, these revisions require a closer understanding of both eligibility standards and compliance expectations.

Here are our takeaways:

1. Changed Definition of “Qualifying” Property

The new guidance refines what it means for a building to qualify. A property is now only considered eligible if prior to abandonment, it was operational for income-producing purposes. This changes the program’s original goal: to incentivize the redevelopment of any property that has been abandoned, excluding single-family residences.

2. Size and Ownership Thresholds

The Department of Revenue has taken the new position that for state-owned abandoned buildings only properties of 50,000 square feet or more qualify. Smaller buildings, regardless of condition, do not. This would eliminate buildings such as churches, old schools, old municipal buildings, buildings owned by non-profits, etc.

3. Notices of Intent Process

Notices of Intent (“NOI”s) can now only be filed electronically with the Department of Revenue. The Department’s acknowledgement no longer means it is an approval of eligibility, confirming estimated rehabilitation expenses, or providing the final credit amount. The Department of Revenue will allow amendments to existing NOIs through June 1, 2026, to allow applicants time to adjust to the new framework.

4. Transferring Tax Credits

The resolutions are no longer transferable, meaning taxpayers may not sell an abandoned building that has received its resolution to a new owner who then revitalizes the site. When a property is sold, the new owner must obtain a new resolution from the governing body and file a new NOI. Additionally, there are updates to the qualifying square footage calculations. The new guidance has increased the rule to 300% (from 200%), similar to the textile credit rule.

5. Tax Credits being used as Collateral

New guidance that was unrelated to the original legislation was added into the Revenue Ruling saying the credits may be collateralized as security for a debt. This is a drastic change in how the credits may be used with implications on the lending side of any deal going forward.

The Big Picture & Next Steps

The South Carolina Department of Revenue issued this new Revenue Ruling that becomes effective on June 1, 2026. In response to this, a statewide coalition has formed that is seeking a legislative fix to clarify what the original intent of the statute was when it was originally passed back in 2013.

Senator Tom Davis, who led the extension effort back in 2024, has introduced Senate Bill 853 that would clarify the statute back to its original intent, which would allow any property to qualify except for single-family homes. The legislation addresses all five items found above. For TCM partners, success with this program depends on early due diligence, precise structuring, and a strong understanding of both eligibility and intent. If you are interested in learning more about this, please email me at MZackon@taxcreditmp.com.

As always, Tax Credit Marketplace is here to help you navigate these changes. Reach out to a member of our team with any questions (info@taxcreditmp.com).

Tax Credit Marketplace is informing you that the information provided is of a general nature and does not address the circumstances of any particular project, entity, or individual. Nothing in this article constitutes professional and/or financial advice, investment advice, tax advice, or legal advice. Any tax topics contained in this article are not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the tax laws and regulations of the State of South Carolina or any local governmental entity or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Furthermore, nothing in this article should be construed as an offer to solicit or sale securities.