What to expect as Charleston County reassessment redistributes the property tax burden.

By David Slade, Senior Reporter
The Post and Courier

The word “reassessment” used to prompt confusion and fear among property owners in South Carolina, but the results of Charleston County’s reassessment this year shouldn’t result in huge changes to tax bills, as in the past.

Reassessments are updates of the real estate values used to calculate property taxes, and counties conduct them every five years. The process typically redistributes the property tax burden to areas where home prices have increased most rapidly, and away from areas that have lagged behind.

Those tax shifts used to be dramatic — so dramatic that after Charleston County’s 2005 reassessment, South Carolina’s property tax system was overhauled by Act 388 in 2006. There are now caps on how much a property’s taxable value can increase, as long as the ownership doesn’t change, and limits on local governments’ ability to increase tax rates.

“I don’t think the drama with reassessment is what it used to be,” said Charleston County Assessor Toy Glennon.

Although it’s Charleston County that’s reassessing this year, the clear winners in term of tax bills will be Daniel Island and Cainhoy peninsula residents who live in the city of Charleston, in Berkeley County.

That’s because when reassessments increase a government’s tax base, that local government must compensate by lowering their property tax rate. But there can be a disconnect in the timing when cities, such as Charleston, are in more than one county.

Berkeley County reassessed property last year, but the city of Charleston couldn’t adjust its tax rate until this year, following Charleston County’s reassessment.

“They get so mad every five years,” said Amy Wharton, the city’s chief financial officer. “We can’t control when the counties reassess.”

The same thing happens in the small portion of North Charleston that’s in Dorchester County, which reassessed last year.

Reassessments can still prompt confusion. Property taxation is unfortunately complicated in South Carolina.

What most Charleston County homeowners need to know is this:

• The county will be mailing notices in September of the new values assigned to properties, and the owners will have 90 days to appeal if they disagree.
• Those property values are supposed to represent what homes, land and businesses were worth at the end of 2018. Except for new construction or properties that changed ownership, those assessments will reflect changes in value since 2013.
• In October, property tax bills will be mailed. Due to reassessment, those bills could be higher or lower than before, but changes in tax rates will also play a role.

Local governments sometimes increase taxes during reassessment years, when taxpayers may be confused about the factors changing their tax bills.

Local governments typically have to reduce their tax rates following a reassessment because their tax base has been increased. However, they can also approve a tax increase, so the result can be both a tax increase and a tax rate that’s lower than before.

“Most folks aren’t really paying attention,” said Charleston County Auditor Peter Tecklenburg. “If the millage goes down three mils and they raise it one mil, most people won’t realize it didn’t go down as much as it could.”

Millage — just one more thing that makes property taxes confusing — is how tax rates for property are described. A mil is a dollar of tax for every $1,000 of assessed property value.

Assessed values themselves are a percentage of a property’s actual value. Owner-occupied homes, for example, are assessed at 4 percent, so a home worth $200,000 would be assessed at $8,000. That same home, if it were a rental property, would be assessed at 6 percent, or $12,000.

And Act 388 added another big wrinkle. Assessments can only be increased by 15 percent during a reassessment, regardless of what a property is actually worth. However, if a property changes ownership its immediately reassessed at full value.

So, if someone’s home was worth $200,000 in 2013, and at the end of 2018 it had the same ownership and was worth $300,000, it would be reassessed at $230,000 and the remaining property value would go untaxed.

Those rules shift the tax burden from long-time property owners to more recent property buyers.

This year is the third reassessment in Charleston County since Act 388 took effect, so some long-time homeowners have now seen their tax liability capped multiple times.

“The caps are now at the point where they are stacking,” Glennon said.

With a 15 percent cap on how much a property’s assessment can increase over five years — from 2013 to 2018 in this case — it’s likely that most properties in Charleston County that did not change ownership will hit that cap.

And the more properties that hit that cap, the less the tax burden will be shifted around.