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Confusion over South Carolina ATI Exemption

by Kevin Baker, Atlanta, June 2018

 

When South Carolina commercial real estate is sold, a reassessment is triggered that can lead to a higher assessed value and more expensive tax bills.

 

S.C. Code ยง 12-37-3135 offers new owners an Assessable Transfer of Interest (ATI) exemption that can reduce the property tax value below the current fair market value.

 

Recently, questions have come up regarding how the exemption can be utilized.

 

Computing the Exemption

 

The ATI exemption is determined by comparing the fair market value of property when it is sold with the fair market value of the property as shown on the tax roll. Since counties reassess property values every five years, the value on the county records is often lower than the value when property is sold.

 

The ATI Exemption allows taxpayers to reduce the fair market value of property by up to 25%, but not lower than the current value in county records.

 

Filing Protocol

 

Taxpayers should file an application to receive the ATI Exemption before January 31st for the tax year that they first claim eligibility for the exemption.

 

However, rulings in two South Carolina Administrative Law Court decisions, Windsor Club, LLC v. Dorchester County Assessor and Fairfield Waverly, LLC v. Dorchester County Assessor, stated that taxpayers can receive the ATI Exemption even if they fail to file an application when it is first available.

 

Despite these court rulings, South Carolina Tax Assessors are taking a stand to deny ATI Exemptions that were not filed in the first year of eligibility. The Fairfield Waverly case is now being heard by the Court of Appeals. In the meantime, property owners who anticipated getting tax relief even though they filed late are left in a very unfortunate position.