Could a South Carolina property owner lower a tax assessment after market prices fell between reassessments?

Plain-English summary

A legislator asked whether county assessors had been told to leave property tax values unchanged when market prices fell after a countywide reassessment. The Attorney General explained that the 2012 tax statute fixed the value used for taxes at specified dates unless a statutory event triggered a change. Assessors could not create a separate valuation system to account for a later market downturn. An appeal of the reassessment value had to use market values from the year of that reassessment.

A sale could have a different effect. If it was an assessable transfer of interest, the property had to be newly appraised at its then-current fair market value, subject to applicable exemptions. Merely listing a property below its tax value, without a completed assessable transfer, did not itself trigger a new valuation.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could an owner get a lower tax value just because local prices fell after reassessment? A: The AG said no under the 2012 statutes. An assessor needed a statutory reason to change the value and could not substitute a new market-downturn formula.

Q: Could an appeal use the property's lower value from a later year? A: The opinion read the appeal statute as requiring the assessor to consider market values from the year of the countywide reassessment on which the challenged assessment was based.

Q: Would listing a house below its assessed value trigger a new appraisal? A: No. The opinion found no statutory trigger from a proposed sale price alone. An assessable transfer required execution of the instruments that transferred the interest.

Q: What happened after a qualifying sale?
A: The AG said an assessable transfer triggered a new appraisal reflecting the property's then-current fair market value, unless an exemption applied. The value could move up or down under that appraisal.

Background and statutory framework

The opinion read Section 12-37-3140 as identifying when a tax value was set or reset. It read section 12-43-215 as tying an assessment appeal to the market conditions of the reassessment year. It distinguished a completed assessable transfer, defined in section 12-37-3130, from an uncompleted offer or listing. For a new appraisal, it invoked the true-value standard in section 12-37-930.

Citations and references

Statutes: Section 12-37-3140; section 12-43-215; section 12-37-3130; section 12-37-930.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/june-7-2012/
• Original PDF: https://www.scag.gov/wp-content/uploads/2012/06/long-d-a-os-9455-6-7-12-fair-market-value-of-real-property-ad-valorem-tax.pdf

Original opinion text

ALAN WILSON
ATTORNEY GENERAL

June 7, 2012

The Honorable Deborah A. Long
Representative, District No. 45
4 14-A Blatt Building
Columbia, South Carol ina 2920 I
Dear Representative Long:
On behalf of your constituent, you have submitted a request for an opinion of this Office concerning the fair market value of real property for the purposes of calculating ad valorem tax. Specifically, you have inquired whether this Office "has instructed county tax assessors" not to allow changes in the fair market value for tax purposes where the value of the property at issue has decreased since the most recent countywide reassessment. In addition, your constituent notes as follows: "I have noticed in the past that if a property sells for more [than] the assessed value that the county automatically ups the appraised value. However, if the property sells for less than the assessed value then nothing changes." In this opinion, we will address both of these concerns. As an initial matter, however, we must note that the advice of this Office concerning the current status of the law should not be construed as a comment on the wisdom of the underlying policy. Like the county tax assessors themselves, this Office is bound by the terms of the relevant statutes. Only the General Assembly has the power to alter the current tax structure in order to address your constituent's concerns. See, e.g. , S.C. Const. art. X, § 6 ("The General Assembly is authorized, by general law, to define 'fair market value' and to define when property has been improved or when losses have occurred to change the value of the real property."). Analysis

Change in value in a non-reassessment year
Section 12-37-3140 of the South Carolina Code (Supp. 20 11 ) provides in relevant part as follows: (A)(I) For property tax years beginning after 2006, the fair market value of real property is its fair market value applicable for the later of: (a) the base year, as defined in subsection (C) of this section ; (b) December thirty-first of the year in which an assessable transfer of interest has occurred; (c) as determined on appeal ; or

REMBERT

c. D ENNIS B UILDI NG • P OST OFFICE Box 11549 • C OLUMBIA, SC 29211 - 1549 • TELEPHONE 803-734-3970 • F.\CSIMILE 803-253-6283

The Honorable Deborah A. Long
Page 2
June 7, 2012

(d) as it may be adjusted as determined in a countywide reassessment program conducted pursuant to Section 12-43-217, but limited to increases in such value as provided in subsection (B) of this section. (2) To the fair market value of real property as determined at the time provided in item (I) of this subsection, there must be added the fair market value of subsequent improvements and additions to the property.

(C) For purposes of determining a "base year" fair market value pursuant to this section, the fair market value of real property is its appraised value applicable for property tax year 2007. As section (A)(l) of the above-quoted statute makes clear, the fair market value that will be used to calculate ad valorem taxes on real property is fixed at certain dates unless one of the statutory conditions triggers a change in that value. Accord Letter to the Honorable Donald C. Smith, Op. S.C. Att'y Gen. (Jan . 29, 2007) ("[T]he Assessor, in the absence of one of the recognized exceptions, may only reassess property in a reassessment year."). Moreover, pursuant to section 12-43-215 of the South Carolina Code (2000 & Supp. 2011 ), "[w]hen a property owner ... appeals the value of a property assessment, the assessor shall consider the appeal and make any adjustments, if warranted, based on the market values of real property as they existed in the year that the equalization and reassessment program was conducted and on which the assessment is based." (Emphasis added). Thus, the appeal of a value determined during countywide appraisal may not rely upon evidence regarding changes in market conditions after that time. For these reasons, we concluded in an opinion of this Office dated June 9, 20 I 0, that "[a]djustors must follow State law and refrain from creating unauthorized systems of valuation to compensate for the downturn in the market." Letter to The Honorable Alan D. Clemmons, Op. S.C. Att'y Gen. (June 9, 2010) (enclosed with your request). As noted at the outset, it is within the power of the General Assembly to alter these statutes if it so desires.

Change in value at the time of a sale
Section 12-37-3130 of the South Carolina Code defines an "assessable transfer of interest" as "a transfer of an existing interest in real property that subjects the real property to appraisal." Section 12-37-3150(A) enumerates several types of assessable transfer of interest, and section l 2-37-3 l 60(A) empowers the Department of Revenue to promulgate regulations to further clarify this term. Pursuant to section 12-373 140(£), "changes in value resulting from assessable transfers of interest occurring in a property tax year are first subject to property tax in the following tax year . ..." Accordingly, your constituent is correct that the value used to calculate ad valorem taxes can increase as the result of a sale of property, provided the sale constitutes an assessable transfer of interest and no other provision prevents or limits such increase. See, e.g., S.C. Code Ann.§ 12-37-3135 (exempting for certain eligible properties a portion of any such increase).

The Honorable Deborah A. Long
Page 3
June 7, 2012

As to a scenario in which a property is marketed for sale at an amount less than the current value used in assessing property taxes but has not yet sold at that lesser amount, we find no statutory provision allowing for a change in the value used for taxation. Rather, section 12-37-31 SO(A) provides, in relevant part: An assessable transfer of interest resulting in the appraisal required pursuant to this article occurs at the time of execution of the instruments directly resulting in the transfer of interest ... . (Emphasis added). Nevertheless, once an assessable transfer of interest occurs, section 12-3 7-930 would demand that the resulting appraisal reflect a reasonable estimate of the then-current value of the property. Id. ("All property must be valued for taxation at its true value in money which in all cases is the price which the property would bring following reasonable exposure to the market, where both the seller and the buyer are willing, are not acting under compulsion, and are reasonably well informed of the uses and purposes for which it is adapted and for which it is capable of being used."). Conclusion Section I 2-3 7-3140 defines the times at which the fair market value of real property will be determined for the purpose of imposing an ad valorem tax. Assessors lack the authority to defy the clear mandates of statute in order to accommodate property owners who suffer a decrease in the value of their property. Likewise, this Office must base its advice upon the statutes as written. We are aware of no relevant change in the law since the June 9, 20 I 0, opinion you enclosed with your request. As your constituent has noted, an assessable transfer of interest will trigger a new appraisal of the relevant property. This new appraisal should reflect the current fair market value of the property, unless an exemption applies. Very truly yours,

U~t7f{µt

Dana E. Hofferber
Assistant Attorney General
REVIEWED AND APPROVED BY:

Robert D. Cook
Deputy Attorney General