PrintPrintA study conducted by professor Tim Allen, director of the Carter Real Estate Center at the College of Charleston, concludes that South Carolina’s property tax system has considerable inequities.
Staff Report
Published March 11, 2009
A study conducted by professor Tim Allen, director of the Carter Real Estate Center at the College of Charleston, concludes that South Carolina’s property tax system has considerable inequities.
The study attributes the inequity to provisions in the tax system, including the controversial “point-of-sale assessment,” that lead to different effective tax rates for property owners.
Under the S.C. Real Property Valuation Reform Act, assessors must appraise real property in the year in which ownership was transferred to determine its assessed value for the coming year.
Although the assessed value of properties that do not change hands is limited to an increase of 15% within regular, 5-year assessment cycles, no limit applies to changes in assessed value that are triggered by a sale. Properties involved in a sale are assessed at their market values at the time of the transfer.
When property values are rising between assessment cycles, the point-of-sale assessment effectively results in different property tax rates for properties with the same fair market value.
Such a property tax system is classified as “inequitable,” and that inequity can influence people’s decisions to buy or sell property, thereby affecting supply and demand conditions in the real estate market.
“Under the current property tax system in South Carolina, not all property owners face the same real property tax burdens relative to their properties’ values. Thus, the system is inequitable,” Allen said.
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