On June 14th, Governor Haley signed into law H 3713. Dubbed the “point of sale bill,” the legislation limits increases in the fair market value of commercial property brought about by assessable transfers of interest.
When commercial property (all real property other than that used as the primary residence and for manufacturing) undergoes an assessable transfer of interest (as defined in S.C. Code Ann. § 12-37-3140) after 2010, and its assessable transfer of interest (ATI) fair market value is greater than the current fair market value on the books of the property tax assessor, then the excess amount (up to twenty-five percent of the transaction fair market value) is exempted from property tax.
The exemption value (the transaction fair market value less the exemption) cannot be any less than the current fair market value, and in the event the transaction market value is less than the current fair market value, then the transaction market value applies.
If commercial property on the assessor’s rolls at $750,000 is sold according to an appraised ATI fair market value of $1,000,000, then an exemption of $250,000 applies (25% of $1,000,000) and the property is assessed at $750,000.
If the current fair market value of the property is $800,000, and it is sold according to an appraised ATI fair market value of $1,000,000, then an exemption of $200,000 applies because the exemption value cannot fall below the current fair market value. Likewise, in the event the appraised ATI fair market value comes in at $750,000 and the current market value is $800,000, then the ATI fair market value of $750,000 applies and no exemption value is calculated.
Finally, any increase in value that takes place per a countywide reassessment is calculated on the exemption value of the parcel.
This legislation has the potential to apply to every assessable transfer of interest involving commercial property taking place in 2011 and going forward.