Taxation – Real Property – Assessable Transfer of Interest Exemption – Timing

When an assessable (i.e., appraisal-triggering) transfer of interest, or ATI, in real property occurs, our property tax statutes provide for an ATI exemption. Reading the relevant statutes together, a taxpayer who purchases qualifying property before an implementation year may claim the ATI exemption by January 31 of the implementation year or may also use the appeal procedure in the Revenue Procedures Act.

We affirm the ruling of the Administrative Law Court.

All taxpayers are liable for property taxes based on the property they own as of December 31 of the preceding year. See S.C. Code Ann. § 12-37-610. The tax bills for a given year do not go out until September of that year. S.C. Code Ann. § 12-45-70(A). The bills for the “current” tax year are not due until the following January.

A person who buys property after January has until at least January 31 of the following year to claim the ATI exemption. By that time, however, the law envisions the property will have been reappraised.

Here, the taxpayers made assessable property purchases in November and December 2012, respectively. Both taxpayers were going to be statutorily liable for the 2013 property taxes because they owned the property as of December 31, 2012.

We do not know whether the reappraisal process would occur by the end of 2012, but we doubt it. “Once every fifth year each county or the State shall appraise and equalize those properties under its jurisdiction.” S.C. Code Ann. § 12-43-217(A). “The county or State shall implement the program and assess all property on the newly appraised values.”

Neither taxpayer would receive their first tax bill until September of 2013. That bill would be due in January of 2014.

The appellant-assessor contends that even by the receipt of the first tax bill in September of 2013, the taxpayers already lost the ability to claim the ATI exemption because they did not do so by the previous January, almost immediately after both sales occurred. We believe a construction that bars taxpayers in this situation from claiming the exemption would create a disorderly process rather than an orderly one. We cannot conceive of a reason why one set of purchasers—those who purchase property early in the year—would be afforded two tax years to claim the ATI exemption—those who purchase later in the year—would have not even a year (here, less than two months) to make the same election.

We believe the legislature intended all purchasers would have a meaningful opportunity to claim the ATI Exemption. Accordingly, we find the legislature articulated that intent in tying the exemption’s application to notice by January 31 of “the tax year for which the owner first claims eligibility.” § 12-37-3135(C).

Reading together the ATI exemption, the five-year reassessment statute and other statutes in this area, we conclude that a taxpayer who purchases qualifying property before an implementation year may claim the ATI exemption by January 31 of the implementation year or may also use the appeal procedure in the Revenue Procedures Act. This ensures such a taxpayer will have a meaningful opportunity to claim the ATI exemption and honors the legislature’s intent that there be a uniform procedure for reassessing property.

The reassessment process has no effect on a taxpayer purchasing property during an implementation year. Property tax liability looks backwards to December 31 of the previous year. Someone purchasing property during an implementation year would not receive the first property tax bill until the following year. That taxpayer is entitled to claim the ATI exemption, but may not wait until after the next five-year reassessment.

Affirmed.

Fairfield Waverly, LLC v. Dorchester County Assessor (Lawyers Weekly No. 011-093-20, 9 pp.) (Blake Hewitt, J.) Appealed from the Administrative Law Court (S. Phillip Lenski, ALJ) Andrew Shepherd and John Frampton for appellant; Burnet Rhett Maybank and James Peter Rourke for respondents. S.C. App.