There is a reason why tourism is such a big thing for South Dakota. It's home to premier landmarks such as Mount Rushmore, which is probably one of the most internationally recognizable structures in the world. Needless to say, buying real estate here is a win for your portfolio.
Be that as it may, as an investor, you do need to understand the different implications that come with your attempts to bolster your portfolio. One of these is taxation. More specifically in these cases, we're talking about property tax payments.
It can seem pretty complicated to understand all the moving parts, but at the same time, you don't exactly have a choice since your late fees can really start to rack up, and ignorance is no excuse.
Thankfully, we've created a pretty concise guide that should hit all the major concerns such as how South Dakota property taxes are calculated, how often you're expected to pay, what happens if you're late, and even a few ways that you may be able to reduce the amount. After all, we want to ensure that you're as prepared as possible.
How Many Times Do You Pay Property Tax a Year in South Dakota?
In South Dakota, real property taxes are due on the first of January. Unlike some other states that have different due and payable dates, the two are the same here. Be that as it may, you are allowed to pay in two installments though you're technically required to pay once annually.
Your first installment must come in on or before April 30th, with the second half needing to be paid by October 31st. Once you can hit both these dates, then there will be no penalty to think about.
Note, however, that these dates can fall on a public holiday or weekend, which means that you would need to pay on the last business day before by 4:45 PM for the payment to not be considered late.
Consequences of Late Payments
If the due dates should pass and your taxes are not paid, then a 10% tax penalty will be imposed on you. Taxes not postmarked by the installment dates will also be seen as late. Therefore, it's essential that if you are going to be using the mail to pay your property tax money, you do so early enough for it to arrive by the desired time.
By law, the treasurer's office will be required to do a tax certificate sale on December's third Monday of each year. Tax certificates will be issued and sold on any property that has delinquent taxes. The treasurer's office maintains a list of the properties that fall under this umbrella.
Holders of tax certificates will earn interest daily on the payments that they make. Redeeming a tax certificate requires the property owners to pay any past-due taxes plus whatever additions or daily interest may apply.
How to Pay a Property Tax Bill in South Dakota
How your real estate taxes are paid will depend on which county you're in. However, you will find that many of the payment options are similar. Here, we will use Pennington County as an example, which offers the following options:
- Online - You will only be allowed to pay current taxes and not delinquent ones. Application of payment reflects the date of receipt. However, to be included on a particular day, they must be received by midnight. Though the application date is the receipt date, allow 3-4 days for the website to reflect the payment. Additionally, if a payment is made outside of regular business days, it will be posted on the next open day of business.
- Mail - If you are paying by mail, then you will want to check with your County website or treasurer's office to get the mailing address that is to be used. Again, these payments need to be postmarked by the tax due date to count. If not, they will be seen as delinquent and will be returned. Penalties and interest will then become a part of the equation.
- In-person - You may also visit the treasurer's office to make your payment, which can be done by check, cash, debit card, credit card, or money order at the counter.
- Secure drop box - For your convenience, there is a drop box that you may use which lies outside the County Administration Building's main entrance.
- ACH - Your taxes must be current to use this method and applications are required to have been submitted for the following year's taxes by December 15. From January to October, a 10-month payment plan will see withdrawals coming from your account. There is no need to reapply unless your property ownership status or banking information changes. If on any month, the funds for withdrawal are unavailable, unposted payments will be returned, and you'll need to use one of the other options to pay.
Note that there is a $40 processing fee on any bank-returned items. Additionally, if a check was previously returned for insufficient funds, no check will be subsequently accepted.
How Much Is Property Tax in South Dakota?
Establishing Property Value
The process of determining your tax burden starts with determining the full and true value or market value of your property.
Taxable Value of the Property
Following the determination of the assessed value, the property will be equalized to 85% for property taxes.
Applicable Tax Levy
Next, it's important to determine how much taxes are needed for the unit of government to be able to meet its operating costs. The more revenue needed by the applicable districts, the greater the amount of taxes you will need to pay.
However, thanks to the Tax Reduction Act, there's a limit imposed on the amount of property taxes an entity can ask for. The local government will try to use property tax, sales tax, and other taxes to make up the budget.
Just like there is a local sales tax rate, there will also be a property tax rate, the latter of which will be expressed as a number of dollars per thousand of property value.
Finally, the determined rate will be used to calculate what the tax levy request made of you will be.
How Can I Lower My Property Taxes in South Dakota?
Appeal the Assessment
With your tax notice provided, you may feel as if the value used was too high. In this case, there is a designated appeal process that you can use. It requires you to complete the necessary forms and to have supporting evidence that will help make your case that overvaluing took place.
You will then need to file the appeal and attend a hearing to both provide your evidence and answer any questions that may be asked of you by the County Board of Equalization. The final decision can be appealed via the Circuit Court or the Office of Hearing Examiners.
Look into Disaster Relief
You may be eligible for property tax relief if your home has been damaged or destroyed by a disaster, especially if a state of emergency has been declared.
Look into Exemptions
Exemptions are another potential option since, once eligible, you will be able to enjoy reductions to your tax bill. Examples include the South Dakota Homestead Exemption and the South Dakota Senior Citizens Exemption. The former will delay property taxes for eligible applicants until their property is sold, with the latter granting a reduction in the assessed value of your property.
Property taxes in South Dakota are not particularly easy to navigate, but they don't need to be too difficult to understand either. It starts with knowing what you need to pay attention to including how the taxes are calculated, when they are due, when payments are required, and what the consequences for late payments may be.
Since legislation is consistently reviewed, the onus is on you to ensure you stay up to date with the state's property tax requirements, having been given a good starting foundation here.