Burr & Forman

01.17.2019   |   Blog Articles, Income Tax, South Carolina Tax, Tax Law Insights

South Carolina Property Tax Case Highlights Valuation Issues

A recent decision by the South Carolina Administrative Law Court (ALC) highlights many of the valuation issues that can arise when property is appraised by a county assessor.  In Taylor v. Aiken County Assessor, S.C. Admin. Law Ct., Dkt. No. 17-ALJ-17-03466-CC (December 27, 2018), a taxpayer sought to challenge the appraised value of a 6.4 acre parcel of land.  The amount in dispute was not significant, with the taxpayer claiming the value was $15,800 and the county assessor contending the value was as high as $30,080.

The taxpayer purchased the property at a tax sale for $3,075.10.  The county assessor initially appraised the land with a value of $30,080 using the County’s Computer Aided Mass Appraisal (CAMA) system.  CAMA systems are used by South Carolina counties to efficiently appraise large numbers of properties without having to inspect each property.

The taxpayer appealed the initial $30,080 valuation, arguing the value was $12,800 based on the taxpayer’s assessment of comparable property sales prices and the physical state of the subject property.  The county assessor then visited the property and determined the value should be $28,800.  The taxpayer disagreed with this valuation as well and brought a gorge located in the property to the county assessor’s attention.  The county assessor then reduced the value to $22,400.

The taxpayer appealed the county assessor’s valuation to the county board of assessment appeals.  The county board of assessment appeals agreed with the county assessor’s final valuation of $22,400.

The taxpayer appealed the county board of assessment appeals decision to the ALC.  After the appeal was filed, the county assessor visited the property again to conduct a more extensive walk-through of the property.  Following the walk-through, the county assessor asserted that the value of the property was $28,800 based on comparable sales.  The taxpayer maintained the value was $12,400 and relied on comparable sales first introduced at trial before the ALC.

The ALC found the taxpayer’s comparable sales were not probative of value because they were not between willing sellers and willing buyers.  The taxpayer’s comparable sales involved a tax sale, sales between family members, a bank sale, and a sale to an adjacent landowner.  The ALC found the county assessor’s comparable sales were also not probative of value because there were no adjustments for the detrimental site characteristics of the taxpayer’s property.  In the end, the ALC upheld the $22,400 valuation determined by the county board of assessment appeals.

While the Taylor case involved a dispute over less than $15,000, it illustrates the following issues that apply to all county property tax cases:

  1. The process to appeal a property tax case can take years. The first appeal in the Taylor case was filed early in 2016 and the ALC decision was not issued until December 2018.
  2. There are multiple levels of factual review in a property tax case. A taxpayer must challenge the valuation first with the county assessor, then with the county board of assessment appeals, and finally with the ALC.
  3. When a property tax value is challenged, the value can be increased from the challenged value. There is a risk whenever a taxpayer challenges a property tax value that the value will increase from the original valuation.
  4. Property tax values are based on a willing seller, willing buyer fair market value standard. Tax sale values, bank values, and related party sales are not indicative of the fair market value.
  5. Counties use mass appraisal systems and do not account for detrimental property characteristics. Mass appraisals are often successfully challenged based on the specific condition of property.
  6. Hiring an appraiser is almost always necessary to support a claimed valuation and should be done prior to filing an appeal, or at least before going before the board of assessment appeals.

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