Vol. 10, No. 3, Pg. 38. Real Estate Taxes: Six Percent or Four Percent? (Or Something in Between?).

• Author: By Cary S. Griffin and David J. Tigges

South Carolina Lawyer

1998.

Vol. 10, No. 3, Pg. 38.

Real Estate Taxes: Six Percent or Four Percent? (Or Something in Between?)

38Real Estate Taxes: Six Percent or Four Percent? (Or Something in Between?)By Cary S. Griffin and David J. TiggesLet us look at some simple math. Assume a home located in Charleston County is valued at $300,000 and the current millage rate for that location is 265. If the home served as a "legal residence," the real property tax for the year would equal $3,180 (300,000 x .04 x .265). If that home did not serve as a legal residence, the real property tax for the year would equal $4,770 (300,000 x .06 x 265).

That $1,590 differential is a result of a special provision contained in S.C. Code Ann. § 12-43220(c)(1), which provides for the application of a four percent assessment ratio, and not the standard six percent assessment ratio, when calculating the real property taxes for a legal residence.

Sounds simple, right? Unfortunately, during the last 18 months, when a sale of the real property occurred the determination of the correct assessment ratio (four percent or six percent) has been anything but simple.

BACKGROUND

Pre-1997. For years, the four percent assessment ratio has been available to real property that is considered a legal residence. Real property is a "legal residence" if the owner is domiciled at that property. An owner may only receive the four percent assessment ratio for one residence each tax year. To receive the four percent assessment ratio, the owner must submit a timely application with the local county tax assessor.

Pursuant to S.C. Code Ann. §12-43-220(c)(2)(ii), the application must be filed before the first penalty date for the payment of the tax for the year the owner first claims eligibility for the four percent assessment ratio. This means January 15 of the following tax year. Further applications or renewals are unnecessary provided the owner continues to satisfy the eligibility requirements.

Historically, when calculating the tax bill at the end of the year, county tax assessors applied the assessment ratio to a property as it existed on January 1 of the tax year. Remember, in South Carolina, real property taxes are paid in arrears. Thus, when a domiciled owner sold a legal residence to a non-domiciled owner, the real property taxes were still determined by applying the...