2024 Tax Planning Time
December 4, 2024
Estate Planning for Your Digital Presence
March 7, 2025
What is the ATI Exemption?
South Carolina law provides for a property tax exemption to certain real estate investors in the year following a sale and for up to four years after the sale (“ATI Exemption”). South Carolina Code Ann. § 12-37-3135 provides that where (1) a property is taxed at the 6% assessment ratio prior to a transfer; (2) the property remains taxed at the 6% assessment ratio after the transaction; and (3) the purchase price exceeds the value at which the property was being taxed prior to the transfer, then an exemption of up to 25% of the new valuation may be applied for up to 5 years after the sale.
How Does the ATI Exemption Work?
The savings under this exemption can be quite substantial. Consider the following example – You purchased an investment property for $1,000,000. Your ATI Exemption would be calculated as follows:
ATI Market Value (typically the purchase price) $1,000,000
Market valuation on the 2024 property tax bill $700,000
25% reduction (the ATI Exemption) $750,000
Taxable Value (greater of either the 2024 Market valuation
or the 25% reduction $750,000
The property taxes due for 2025 will be calculated using the new valuation of $750,000. If you did not apply for the ATI Exemption, your property would likely be taxed at the ATI Market Value of $1,000,000.
How to Apply for the ATI Exemption?
The ATI Exemption should be considered during your due diligence before purchasing an investment property and applied for shortly after closing. In order to receive the full benefit of the ATI Exemption, you must apply with the Assessor’s office by January 30th of the year immediately following the transfer. You may still qualify if you missed this deadline, but you likely will not be entitled to receive the full benefit of the ATI Exemption. Keep in mind the ATI Exemption does not apply to property that is treated as agricultural property, personal residences, or property that is value and assessed by the South Carolina Department of Revenue, such as manufacturing property, utility property, or other types of property used in certain large industries.
