The Horry County Assessor's office is currently conducting mass appraisals of all real property in Horry County to determine a new fair market value for property tax purposes. All property owners will receive their annual tax notices by October of 2014, which will reveal the new assessed property values. The assessed value is required to reflect the poperty's fair market values of December 31, 2013, exactly five years after the last county-wide property reassessment, which valued property as of December 31, 2008. The real esate market has changed since December 31, 2008, with a further decline in prices followed by stagnation, forecosures, short-sales, and other non-traditional transactions. Developers and individual owners of property within several subdivisions and condominium projects are well awere of the fluctuation in pricing experienced during this period of time. As a result, Horry County property owners should scrutinize their new tax bills and take steps to ensure that the value set forth in the upcoming notice accurately reflects the property's fair market values as of December 31, 2013. Property owners will be stuck with this new valuation for the next five years unless the property is transferred.
Pursuant to the South Carolina Real Property Valuation Reform Act of 2006, South Carolina adopted the controversial “point of sale” law. At the time of its passing, the bill was widely supported as it provided property owners with a fifteen percent (15%) cap upon any increase in value realized over the course of a five year reassessment period. Thus, for the long-time owner of a family beach house located in a marketplace where surrounding beach houses were selling for extremely high, sometimes inflated, prices, that owner need not worry about his house being assessed for the surrounding market value. However, the Act also provided an exception to the above rule if the property undergoes an “assessable transfer of interest” or “ATI” during the five year gap between reassessments. Thus, the buyer of an old family beach house in a steeply rising marketplace would now be subject to a new property tax based upon the value of the house as of the end of the year in which it was purchased. In many circumstances, the seller’s prior tax bills were but a small fraction of the buyer’s upcoming tax bill.
When the financial markets collapsed in the middle of 2008, the real estate market’s bubble finally burst, sending already declining prices on a downward spiral that only recently subsided. During the last reassessment, Horry County saw thousands of appeals, even from those owners who purchased property in 2008 and who had been assessed based upon the transfer price. The typical argument centered around the fact that, even as early as the beginning of 2008, no one was aware of the breadth of the financial crisis and anticipated the market returning in short order. Upon the discovery of the depths of the financial crisis by the middle of 2008, development, resale, and transactions as a whole nearly came to a stop.
The Bellamy Law Firm successfully represented several commercial and residential property owners in appealing the new values. In one case, in which a commercial developer and the County Assessor were unable to agree upon a value of an assemblage of two oceanfront and two second row lots in Myrtle Beach, The Bellamy Law Firm took the case to trial in the South Carolina Administrative Law Court in Columbia. At the conclusion of the hearing, the Court ruled in the developer’s favor, valuing the properties collectively at $3,800,000.00, as opposed to the $6,000,000.00 figure sought by Horry County. As a result, the property owner saved approximately $30,000.00 annually or $150,000.00 in tax payments over the course of the next five years (until the present reassessment).
In 2010, following the flood of property tax appeals and in the midst of the Great Recession, the General Assembly passed an amendment to the Act to give relief to new buyers/transferees of commercial and rental properties. Pursuant to the amendment, owners of commercial and rental properties, which are assessed at the six percent (6%) rate, who obtained ownership pursuant to an Assessable Transfer of Interest/ ATI after 2010 are eligible for a twenty-five percent (25%) discount on their property tax bill. Property owners should take advantage of this discount immediately.
Upon the receipt of a tax bill/notice in October, a property owner will have ninety (90) days to appeal the value to the Assessor. The appeal may not be submitted any later than January 15, 2015. The appeal may consist of either a request to meet with the Assessor to discuss a resolution or through the submission of an opinion of value with proper support. The Assessor will then either schedule the meeting or respond to the property owner’s appeal with a written notice of his decision. If the property owner remains unsatisfied with the Assessor’s valuation, he may, within thirty (30) days, appeal that valuation to the Horry County Board of Assessment Appeals. A hearing will be scheduled and the property owner should be well prepared for the hearing. After the hearing, the Board will send out a written decision of the property owner. If the property owner remains unsatisfied with the Board’s decision, he may, within thirty (30) days, petition the South Carolina Administrative Law Court in Columbia for a hearing. A full evidentiary trial will then be scheduled between the parties and the Court will hear the case without deference to the Board’s findings.
The decision to appeal is a business decision for the property owner to make. If an appeal is made, it is imperative to understand that the tax remains due. Therefore, any unpaid balance of what is later determined to be the final assessable value will be subject to penalties and interest. Property owners, therefore, should pay at least eighty percent (80%) of the tax bill to either avoid, or at least minimize, their exposure to penalties and interest. In the event the final assessable value is determined to be less than that which the property owner paid, the County will refund the property owner the balance, plus applicable interest.
What follows is an exemplary valuation table based upon choice 2013 millage rates. County millage rates vary by tax district and are available through the Assessor’s office. The 2013 millage rates are subject to change. The numbers below will illustrate the potential savings available to a property owner on an annual basis. Again, unless the property is transferred, the valuation will remain the valuation until the next reassessment in five years.
1. COMMERCIAL VALUATIONS (Most Myrtle Beach Millage Rates = .2415)
a. $100,000.00 x .06 = $6,000. $6,000 x .2415 = $1,449/year
b. $250,000.00 = $3,622/year
c. $500,000.00 = $7,245/year
d. $1,000,000.00 = $14,490/year
2. RESIDENTIAL VALUATIONS (Most Myrtle Beach Millage Rates = .1213)
a. $100,000.00 x .04 = $4,000. $4,000 x .1213 = $485.20/year
b. $250,000.00 = $1,213/year
c. $500,000.00 = $2,423/year
d. $1,000,000.00 = $4,852/year
3. ABOVE EXAMPLE OF FOUR ASSEMBLED LOTS IN MYRTLE BEACH
a. March 2008 ATI: $6,000,000.00 = $86,940/year
b. Admin Appeal: $5,600,000.00 = $81,144/year
c. ALC Trial***: $3,800,000.00 = $55,062/year
***Savings of $31,878/ year or $159,390 over 5 years
Property owners should examine their upcoming tax notices to ascertain whether the County’s new valuation is accurate. If the owner believes the valuation exceeds the property’s fair market value, the owner should examine the feasibility of undertaking to appeal that value. The Bellamy Law Firm is available to offer both consultation services to those owners who desire to represent themselves through this process and representation of property owners who desire a law firm experienced in these matters to handle the matter for them from start to finish. Please call Ben Baroody or his assistant Dedie Garren at 843.448.2400 for more information or to schedule an appointment.