It happens every five years and, despite the regularity, it prompts concerns and questions among property-owning South Carolina residents. And this year it's happening in Berkeley and Dorchester counties.
It's reassessment time again.
That's when counties recalculate what every building and piece of land is worth, a process that rearranges the property tax burden to the benefit of some and the detriment of others.
In Berkeley County, reassessment notices have already been sent to owners of the more than 107,000 properties. In Dorchester County, notices are expected to be in the mail later this summer to about 75,000 property owners.
“We’ll be sending out assessment notices sometime in late July or early August," said Dorchester County Assessor Wayne Welch.
The same thing will happen in Charleston County next year. Deputy Assessor Bobby Cale said work is already underway.
Property taxation is complex, with different assessment rates for different types of ownership. Plus, there are exemptions based on ownership, age, disability, military service, the use of the property, multiple tax rates and more. The very simple version — what most property owners need to know following a reassessment — is this: During reassessment the county will recalculate what properties are worth, and if property owners believe the county's number is too high they can file an appeal.
Most property owners no longer see big changes in their tax bills in the wake of a reassessment, as they did prior to the statewide property tax overhaul in 2007. The changes, Act 388, were prompted by protests centered in Charleston County following a 2005 reassessment that coincided with large tax increases by the Charleston County School District.
In some parts of the Charleston metro area, property owners are more likely to feel some temporary financial pain following reassessment. That's because several cities cross county lines, and Charleston County won't reassess until next year.
Normally, local governments lower their tax rates when reassessment increases the tax base — they are required to. However, when municipal boundaries cross county lines there can be a disconnect.
In the Dorchester County portion of the city of North Charleston, and in the Berkeley County portions of the city of Charleston that are home to Daniel Island and the Cainhoy peninsula, reassessments will generally raise the taxable value of properties this year. Those counties and their school districts will adjust property tax rates down to compensate, but North Charleston and Charleston won't adjust their property tax rates until 2020, when Charleston County completes its reassessment.
The same thing happened in those areas during the last two reassessments.
Here are some common questions about reassessment, with answers gleaned from county assessors and previous reporting:
Why reassess property?
Property taxes are primarily based upon what properties are worth, but property values change over time. To keep things fair, state law requires counties to update values every five years.
In Dorchester County, it's been only four years since the last reassessment because the previous one was delayed by a year.
Does reassessment raise taxes?
Reassessment does not raise taxes so much as it redistributes them. Tax rates are required to be lowered to make up for rising property values. After tax rates are adjusted, local governments can decide to raise them, as they could any year, but reassessments alone don't raise the total amount of property taxes collected.
Tax increases are capped at 15 percent, right?
No. Act 388 established a 15 percent cap on property assessment increases, rather than tax increases.
The 15 percent cap limits how much a property's taxable value can rise during reassessment if the ownership hasn't changed and there have been no home additions or major improvements. The cap benefits people who own a property for a long time, or property that's soared in value, because the cap means such properties are taxed below market value, shifting the tax burden to others.
For example, if someone bought a Dorchester County house for $200,000 in 2013 and its value increased to $250,000 by the end of 2018, the taxable value would be capped at $230,000 (a 15 percent increase) during reassessment. If the house changed ownership, its taxable value would be reset.
If my assessment goes up, my tax bill goes up, right?
Not necessarily. During reassessment, properties that had the largest gains in value generally end up with higher tax bills, those that lagged behind end up with lower tax bills, and those in the middle of the pack see little or no change.
"Mostly, the lower part of the county will see a larger increase," said Welch, in Dorchester County.
In Berkeley County, 3.25 percent of properties were found to be worth less than before, and 34.25 percent saw their value increase less than the 15 percent cap. The owners of those properties can reasonably expect a tax decrease, or very little change.
Most remaining Berkeley County properties increased in assessed value by 15 percent — the maximum allowed by law, barring an ownership change — or were assessed at full market value because the ownership changed in 2018, which happened with 8.5 percent of properties.
What about tax bills?
While there is no statutory limit on how much a tax bill can rise following a reassessment, the 2007 changes in law have made large increases unlikely. In general, people who own the same property they owned at least five years ago shouldn't expect big changes during times of increasing property values.
What if I think my property is worth less than the county believes?
Property owners have 90 days to appeal after receiving a reassessment notice. Appeals are challenges to a property's taxable market value, not the owner's tax bill.
Owners who appeal will need to demonstrate why their estimate of the property's value is more accurate than the county's estimate.