Real estate investors acquiring properties in South Carolina have been granted some latitude when they fail to request an available property tax exemption. In a major decision issued on August 26, 2020, the South Carolina Court of Appeals held that a property owner need not claim the 25% property tax exemption when there is an “Assessable Transfer of Interest” (ATI) available to certain commercial properties during the first year of eligibility for the exemption.
South Carolina law generally allows for assessors to revalue commercial properties when there is a transfer or conveyance of the property. S.C. Code Ann. §12-37-3135 creates an exemption from property tax up to 25% of the property tax’s fair market value provided that the property owner notifies the assessor “before January 31 of the tax year for which the owner first claims eligibility for the exemption.” The exemption is generally referred to as the “ATI exemption.”
In Fairfield Waverly, LLC, v. Dorchester County Assessor, No. 5769 (S.C. Ct. App. August 26, 2020), the taxpayers acquired the properties during the closing months of 2012, failed to claim the ATI exemption in 2013 and subsequently claimed the exemption in January 2014. The Assessor denied the requests.
The South Carolina Court of Appeals held that South Carolina assessors must grant the exemption even if claimed after the first year of eligibility.
The Court, however, suggested that the filing deadline is not open ended. By statute, South Carolina counties generally implement countywide reassessment every five years. The opinion seems to suggest that the taxpayer must seek the 25% exemption prior to the next countywide reassessment and that the ATI exemption does not apply beyond the next countywide reassessment.
A further appeal to the South Carolina Supreme Court is possible.