Property owners in Charleston and Dorchester counties will soon learn what the government thinks their homes, businesses and land are worth, as reassessment notices from both counties arrive in local mailboxes.
The results of the reassessments will redistribute the property tax burden throughout both counties, and will impact tax bills in some parts of Berkeley County as well. Some will pay more, others will pay less, and in the meantime, many are expected to be confused.
“Assessment notices seem to scare a lot of people,” said Dorchester County Assessor Wayne Welch. “They think it’s a bill.”
Complicated and widely misunderstood, reassessments update property values within a county. They don’t raise everyone’s property taxes, but they do shift the tax burden toward real estate that’s seen above-average increases in value, and away from real estate that’s lagged behind. If the tax base — the value of all the taxable property in a county — rises during reassessment, state law requires tax rates to be lowered to compensate.
Local governments can still raise taxes, and many have this year, but they are prevented from getting a windfall due to reassessment.
Charleston County plans to mail assessment notices on Sept. 24, Assessor Toy Glennon said. Welch said more than 80 percent of Dorchester County’s assessment notices have already been mailed.
While assessment notices aren’t bills, they play a large role in calculating the property tax bills that soon follow. Property owners are taxed on a percentage of the value of their properties — that’s the assessment — using multiple tax rates that are set by local governments.
“People will know very rapidly the impact on their taxes,” said Glennon, because property tax bills are mailed at the start of October.
She said this is the first reassessment that’s found a drop in property values in some parts of Charleston County. Both Charleston and Dorchester counties looked at changes in values from the end of 2008 through the end of 2013.
At the end of 2008, real estate prices were falling but had not yet crashed. In 2013, prices were rising but had not fully recovered. Glennon said the average gain in value between those years in Charleston County was about 7 percent.
“There are some areas in the county that are down, and we’ve never had that before,” Glennon said. “A lot of the beaches had not recovered. Mount Pleasant was healthily up.”
In broad terms, an average gain in property values of 7 percent countywide that means the tax burden will shift toward properties whose value increased by more than 7 percent during those five years, and away from properties that gained less or fell in value.
Real estate hot-spots in Charleston County, such as Mount Pleasant and the Charleston peninsula, have seen outsized gains in home prices, but state law caps the amount a property’s taxable value can change during reassessment. The maximum increase is 15 percent. So, for example, if someone bought a bargain-priced home during the recession for $200,000 and its value soared to $300,000 by the end of 2013, the taxable value of that home would be $230,000 due to the reassessment cap.
The caps mean lots of homes are taxed on less than their full value, and limits the amount of tax redistribution that can follow reassessment. When the ownership of a property changes, then the property gets reassessed at full value. Those rules were part of a rewriting of the state tax code in 2006 that put limits on the changes that reassessments can bring, prompted by outraged owners of high-value properties in the Charleston area who saw their taxes soar under the old rules.
One quirk of Charleston County’s current reassessment is that it will benefit some Berkeley County property owners. That will happen because the two counties reassessed in different years, but some municipalities are in both counties.
Berkeley County residents who live within the Charleston city limits, on Daniel Island and the Cainhoy peninsula, were reassessed by Berkeley County in 2014 but didn’t get a corresponding drop in their Charleston city tax rate because most of the city is in Charleston County. This year, the city will adjust its tax rate.
“If Charleston County’s reassessment numbers show growth (in property values), which city officials believe they will, city residents in Berkeley County residents should see a slight to moderate property tax reduction,” said Charleston’s Chief Financial Officer, Steve Bedard.
All of the tax-shifting can be complex. A homeowner in North Charleston might pay higher city taxes after reassessment, if their property gained more value than others in the city, but that same homeowner could pay lower county and school district property taxes, because of changes in property values elsewhere in the county.
“It’s about how much everyone in your tax district, or your county, goes up,” Glennon said.
Welch said he could not provide any estimates for Dorchester County, but he said that generally “the higher-end homes tended to come down (in value), while the middle-range homes increased.”