A Path to Lower Property Taxes

[Tyson Scheutze]

Read on as William Owen discusses the ATI Exemption, how property owners can benefit from this tax law, and how to apply for yourself!

If you own property in South Carolina or are considering investing in real estate here, you may have heard of the ATI (Assessable Transfer of Interest) exemption. This exemption can be a game-changer when it comes to reducing your property tax liability. In this blog post, we’ll break down what the ATI exemption is, how it works, and how you can take advantage of it to save money on your property taxes.

What is the ATI Exemption?

The ATI exemption is a provision in South Carolina’s tax law designed to alleviate the financial impact of property reassessments triggered by transfers of ownership. When a property is sold or otherwise transferred, it often undergoes a reassessment of its value. This can result in a significant increase in property taxes, especially if the property has appreciated in value over the years.

The ATI exemption allows property owners to apply for a reduction in the assessed value of their property for tax purposes. This exemption is particularly beneficial for real estate investors, homeowners, and businesses looking to manage their tax obligations more effectively.

How Does the ATI Exemption Work?

Here’s how the ATI exemption process typically works:

• Trigger Event: An Assessable Transfer of Interest occurs when a property is sold, inherited, or otherwise changes ownership.
• Reassessment: Following the transfer, the county reassesses the property’s value, which could result in a higher tax bill.
• Application for Exemption: The new property owner can apply for the ATI exemption to reduce the taxable value of the property. This must be done within a specific timeframe (before January 31st), usually during the year following the transfer to take full advantage of the exemption.
• Approval and Adjustment: If approved, the exemption reduces the assessed value of the property, thereby lowering the property taxes owed.
• Let’s break it down with an example:

Suppose you purchased an investment property for $1,000,000, but its previous taxable value was $700,000. Here’s how the ATI Exemption would be calculated:

ATI Market Value (purchase price): $1,000,000

Previous taxable value: $700,000

25% reduction (ATI Exemption): $750,000

New taxable value: $750,000

Without the exemption, your property would likely be taxed at the full $1,000,000 value. That’s a significant saving!

Benefits of the ATI Exemption

The ATI exemption offers several key benefits:

• Reduced Tax Burden: By lowering the assessed value, property owners can significantly reduce their property tax bills, freeing up resources for other investments or operational expenses.
• Encourages Investment: For real estate investors, the exemption makes South Carolina a more attractive market by reducing the tax impact of property acquisitions.
• Substantial Tax Savings: The reduction in taxable value can lead to considerable property tax savings over time.
• Multi-Year Benefit: The exemption can apply for up to five years after the sale (based on SC revaluation cycles).
• Wide Applicability: It’s available for various types of properties, including multi-family projects, commercial properties, and even vacant land for development.

Who is Eligible for the ATI Exemption?

Eligibility for the ATI exemption depends on several factors, including:

• The nature of the transfer: Sales, inheritances, and certain other transfers trigger reassessments that may qualify for the exemption.
• Timely application: Property owners must apply for the exemption within the required timeframe. The deadline to file for properties purchased in 2024 is January 31, 2025 for the benefit to roll forward this year..

Other Important Considerations

• The exemption doesn’t apply to agricultural property, personal residences, or property assessed by the South Carolina Department of Revenue.
• Even if you missed the initial deadline, you might still qualify for partial benefits in future years

How to Apply for the ATI Exemption

Applying for the ATI exemption is a straightforward process, but it’s essential to act quickly and provide the necessary documentation. Here are the steps:

• Contact your local county assessor’s office to obtain the application form.
• Complete the form with details about the property and the transfer.
• Submit the application along with any required documentation, such as proof of purchase or transfer.
• Follow up with the assessor’s office to ensure your application is processed.

Conclusion

The ATI Exemption is a powerful tool for property investors in South Carolina. By potentially reducing your property’s taxable value by up to 25%, it can lead to significant savings on your annual property tax bill. Whether you’re an investor or business owner, understanding and leveraging this exemption can help you save money and maximize the return on your real estate investments. If you’re considering purchasing a property or have recently acquired property, don’t overlook this opportunity.

Don’t leave money on the table!

Remember, while this post provides an overview, it’s always best to consult with a tax professional or real estate attorney to ensure you’re maximizing your benefits under South Carolina law.