ATI exemption cannot include double-counted improvements

The South Carolina Court of Appeals held that a property’s pre-sale fair market value, not that value plus pre-sale improvements already reflected in an Assessable Transfer of Interest appraisal, must be used when calculating the Assessable Transfer of Interest exemption.

The dispute arose after commercial property owned by the plaintiff changed hands in 2021, triggering an Assessable Transfer of Interest appraisal for the 2022 tax year. Before the sale, the property had been assessed at $6.063 million, and the owner completed approximately $758,000 in improvements. The ATI appraisal established a new fair market value of $8.034 million. Although application of the statutory 25% ATI exemption yielded an exemption value of $6.0255 million, the Charleston County Assessor determined the taxable value should instead be $6.821 million by adding the value of the improvements to the property’s earlier assessment. The plaintiff argued the improvements had already been incorporated into the ATI appraisal and could not be counted a second time.

Reviewing the issue de novo, the Court of Appeals agreed. The court explained that South Carolina’s ATI statutes define “current fair market value” as the value reflected on the assessor’s books for the current tax year, which prior precedent interprets as the property’s pre-sale fair market value. Because that value was $6.063 million, and the calculated ATI exemption could not reduce the property’s taxable value below that amount, the correct taxable value for 2022 remained $6.063 million.

The court further held that the assessor misapplied the statutes governing subsequent improvements. The improvements at issue were completed before the sale and were already reflected in the ATI appraisal establishing the property’s 2022 fair market value. They therefore were not subsequent improvements subject to separate taxation for purposes of calculating the exemption. Adding their value to the earlier assessment effectively counted them twice, a result unsupported by the statutory scheme.

The 8 page opinion is Mt. Pleasant Investments LLC v. Charleston County Assessor, Lawyers Weekly No. 011-030-26.