<p> 1 South Carolina General Assembly 2 118th Session, 2009-2010 3 4 H. 3272 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Reps. Cooper, Merrill, Erickson, Herbkersman, Chalk, Duncan, Long, Sottile, Daning, Lowe, 10 Bowen, Harrison, Horne, A.D. Young, Limehouse, R.L. Brown, Clemmons, Edge and Wylie 11 Document Path: l:\council\bills\gjk\20050sd09.docx 12 Companion/Similar bill(s): 3007, 3130 13 14 Introduced in the House on January 14, 2009 15 Introduced in the Senate on April 23, 2009 16 Last Amended on April 2, 2009 17 Currently residing in the Senate Committee on Finance 18 19 Summary: Real property valuation 20 21 22 HISTORY OF LEGISLATIVE ACTIONS 23 24 Date Body Action Description with journal page number 25 1/14/2009 House Introduced and read first time HJ17 26 1/14/2009 House Referred to Committee on Ways and Means HJ18 27 2/4/2009 House Member(s) request name added as sponsor: Erickson, Herbkersman, Chalk, Duncan, 28 Long, Sottile, Daning, Lowe, Bowen 29 2/5/2009 House Member(s) request name added as sponsor: Harrison 30 3/5/2009 House Member(s) request name added as sponsor: Horne, A.D.Young 31 3/10/2009 House Member(s) request name added as sponsor: Limehouse 32 3/26/2009 House Member(s) request name added as sponsor: R.L.Brown 33 3/31/2009 House Committee report: Favorable with amendment Ways and Means HJ13 34 4/1/2009 House Member(s) request name added as sponsor: Clemmons, Edge 35 4/2/2009 House Member(s) request name added as sponsor: Wylie 36 4/2/2009 House Requests for debateRep(s). CobbHunter, Ott, Merrill, JH Neal, Clemmons, 37 Gambrell, White, Funderburk, McLeod, Hart, Harvin, Weeks, Cooper, Daning, 38 Williams, Hosey, Bingham, Stavrinakis, R Brown, Alexander, Mitchell, Hutto, 39 Brantley, King, JR Smith, and Knight HJ39 40 4/2/2009 House Amended HJ81 41 4/2/2009 House Read second time HJ94 42 4/2/2009 House Roll call Yeas85 Nays23 43 4/2/2009 House Motion to reconsider tabled HJ94 44 4/6/2009 Scrivener's error corrected 45 4/22/2009 House Debate adjourned HJ51 46 4/22/2009 House Read third time and sent to Senate HJ73 47 4/23/2009 Senate Introduced and read first time SJ6 48 4/23/2009 Senate Referred to Committee on Finance SJ6 49 5/6/2009 Senate Committee report: Favorable with amendment Finance SJ13 50 5/14/2009 Senate Special order, set for May 14, 2009 SJ82 51 2/3/2010 Senate Debate interrupted SJ59 52 2/4/2010 Senate Debate interrupted SJ20 53 2/9/2010 Senate Committee Amendment Amended and Adopted SJ35 54 2/9/2010 Senate Read second time SJ35 1 2/10/2010 Scrivener's error corrected 2 2/10/2010 Scrivener's error corrected 3 2/10/2010 Senate Third Reading Failed SJ21 4 2/11/2010 Senate Reconsidered SJ16 5 2/11/2010 Senate Recommitted to Committee on Finance SJ16 6 7 8 VERSIONS OF THIS BILL 9 10 1/14/2009 11 3/31/2009 12 4/2/2009 13 4/6/2009 14 5/6/2009 15 2/9/2010 16 2/10/2010 17 2/10/2010-A 18 1 2 Indicates Matter Stricken 3 Indicates New Matter 4 5 COMMITTEE AMENDMENT AMENDED AND ADOPTED 6 February 9, 2010 7 8 H. 3272 9 10 Introduced by Reps. Cooper, Merrill, Erickson, Herbkersman, 11 Chalk, Duncan, Long, Sottile, Daning, Lowe, Bowen, Harrison, 12 Horne, A.D. Young, Limehouse, R.L. Brown, Clemmons, Edge 13 and Wylie 14 15 S. Printed 2/9/10--S. [SEC 2/10/10 5:23 PM] 16 Read the first time April 23, 2009. 17 18 19</p><p>[3272-3] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 12373140, AS AMENDED, CODE OF 12 LAWS OF SOUTH CAROLINA, 1976, RELATING TO 13 DETERMINING THE FAIR MARKET VALUE OF REAL 14 PROPERTY FOR PURPOSES OF THE SOUTH CAROLINA 15 REAL PROPERTY VALUATION REFORM ACT, SO AS TO 16 POSTPONE THE IMPLEMENTATION OF THE TRANSFER 17 VALUE OF A PARCEL OF REAL PROPERTY UNIMPROVED 18 SINCE THE LAST COUNTYWIDE REASSESSMENT 19 PROGRAM UNTIL THE TIME OF IMPLEMENTATION OF 20 THE NEXT COUNTYWIDE REASSESSMENT PROGRAM 21 AND TO REQUIRE THE FIFTEEN PERCENT LIMIT ON 22 INCREASES IN VALUE TO BE CALCULATED 23 SEPARATELY ON LAND AND IMPROVEMENTS; TO 24 AMEND SECTION 12373150, AS AMENDED, RELATING TO 25 THE TIME AN ASSESSABLE TRANSFER OF INTEREST 26 OCCURS, SO AS TO REVISE THE PENALTY FOR FAILURE 27 TO PROVIDE NOTICE OR FAILURE TO PROVIDE 28 ACCURATE NOTICE TO THE ASSESSING AUTHORITY OF 29 BUSINESS ENTITY TRANSFERS; TO AMEND SECTION 30 1243220, AS AMENDED, RELATING TO THE 31 CLASSIFICATION AND VALUATION OF PROPERTY FOR 32 PURPOSES OF THE PROPERTY TAX, SO AS TO PROVIDE 33 RESIDENTIAL REAL PROPERTY HELD IN TRUST DOES 34 NOT QUALIFY AS A LEGAL RESIDENCE UNLESS A 35 NAMED INDIVIDUAL BENEFICIARY UNDER THE TRUST 36 OCCUPIES THE RESIDENCE AS THAT NAMED 37 BENEFICIARY’S LEGAL RESIDENCE AND THAT 38 INDIVIDUAL BENEFICIARY’S NAME APPEARS ON THE 39 DEED TO THE RESIDENCE AND REQUIRE SOCIAL 40 SECURITY NUMBERS OF APPLICANTS FOR THE LEGAL 41 RESIDENCE ASSESSMENT RATIO; AND TO AMEND 42 SECTION 406035, RELATING TO CONTINUING</p><p>[3272] 4 1 EDUCATION REQUIREMENTS FOR ASSESSORS, SO AS TO 2 REVISE THE REQUIREMENT. 3 Amend Title To Conform 4 5 Be it enacted by the General Assembly of the State of South 6 Carolina: 7 8 SECTION 1. A. Article 25, Chapter 37, Title 12 of the 1976 Code 9 is amended by adding: 10 11 “Section 12-37-3135. (A) When a parcel of real property and 12 improvements thereon subject to the six percent assessment ratio 13 provided pursuant to Section 1243220(e) and which is currently 14 subject to property tax undergoes an assessable transfer of interest 15 in property tax year 2010, there is allowed an exemption of an 16 amount of fair market value of that parcel sufficient to eliminate 17 any increase in fair market value as determined in the appraisal at 18 the time of the assessable transfer of interest over the property tax 19 value. The fair market value to which the cap on increases in fair 20 market value imposed pursuant to Section 12-37-3140(B) applies 21 is the fair market value as it may be reduced by the exemption 22 allowed by this section. The exemption allowed by this section 23 applies at the time the value as determined by an assessable 24 transfer of interest first applies. 25 (B)(1) When a parcel of real property and improvements 26 thereon subject to the six percent assessment ratio provided 27 pursuant to Section 1243220(e) and which is currently subject to 28 property tax undergoes an assessable transfer of interest after 29 property tax year 2010, there is allowed a twenty percent 30 exemption of fair market value of that parcel as determined in the 31 appraisal at the time of the assessable transfer of interest. The fair 32 market value to which the cap on increases in fair market value 33 imposed pursuant to Section 12373140(B) applies is the fair 34 market value as it may be reduced by the exemption allowed by 35 this section. The exemption allowed by this section applies at the 36 time the value as determined by an assessable transfer of interest 37 first applies. 38 (2) Notwithstanding subitem (1) of this subsection, if the 39 exemption provided in subitem (1) would reduce the fair market 40 value of a parcel of real property and improvements thereon below 41 the fair market value of the parcel as previously carried on the 42 books of the property tax assessor, the exemption provided in 43 subitem (1) does not apply and the fair market value shall be the</p><p>[3272] 5 1 fair market value of the parcel as previously carried on the books. 2 However, if the fair market value of the parcel as determined in the 3 appraisal at the time of the assessable transfer of interest is lower 4 than the fair market value of the parcel as previously carried on the 5 books, the exemption provided in subitem (1) does not apply and 6 the fair market value shall be the fair market value determined 7 pursuant to Section 12-47-3140(A)(1)(b). 8 (C) The exemptions allowed by this section continue to apply 9 until the parcel next undergoes an assessable transfer of interest. 10 However, the parcel remains subject to changes in value as 11 determined in a periodic countywide appraisal and equalization 12 program and the limit on the increases in such values pursuant to 13 Section 12373140(B). 14 (D) The exemptions allowed by this section do not apply to the 15 fair market value of additions or improvements made to the parcel 16 not previously subject to property tax. 17 (E) The exemptions provided in this section do not apply 18 unless the owner of the property or the owner's agent notifies the 19 county assessor that the property will be subject to the six percent 20 assessment ratio provided pursuant to Section 1243220(e) before 21 January thirty-first for the tax year for which the owner first claims 22 eligibility for the exemption. No further notifications are 23 necessary from the current owner while the property remains 24 subject to the six percent assessment ratio. 25 (F) The exemptions allowed by this section shall no longer be 26 effective if the property does not remain subject to the six percent 27 assessment ratio provided pursuant to Section 1243220(e) for at 28 least five tax years following the assessable transfer of interest. If 29 the property does not maintain the exemption allowed by this 30 section, in the first tax year which the exemption does not apply, 31 the fair market value of the property shall be increased to the fair 32 market value as determined in the appraisal at the time of the 33 assessable transfer of interest plus any increase attributable to 34 Section 12-37-3140(B). 35 (G) For purposes of this section, ‘fair market value’ means the 36 fair market value of real property and improvements to real 37 property determined by appraisals of the property tax assessor 38 based on initial appraisals and periodic reappraisals conducted 39 pursuant to Section 1243217. 40 (H) For purposes of this section, ‘property tax value’ means the 41 fair market value as it may be adjusted pursuant to Section 12-37- 42 3140(B).”</p><p>[3272] 6 1 B. Section 12373140(A)(1)(b) of the 1976 Code, as last amended 2 by Act 57 of 2007, is further amended to read: 3 4 “(b) subject to Section 12373135, December thirtyfirst of the 5 year in which an assessable transfer of interest has occurred;” 6 7 C.This section applies for real property transfers after 2009. 8 Property tax assessors shall conform the values of parcels of real 9 property which underwent an assessable transfer of interest in 10 2010 before the effective date of this act, to the fair market value 11 of these parcels as that value may have been adjusted to reflect the 12 provisions of Section 12-37-3135 of the 1976 Code, as added by 13 this act. No refund is allowed on account of values adjusted as 14 provided in this section. 15 16 SECTION 2. A. Section 12373150(B) of the 1976 Code, as last 17 amended by Act 57 of 2007, is further amended to read: 18 19 “(B) An assessable transfer of interest does not include: 20 (1) transfers not subject to federal income tax in the 21 following circumstances: 22 (a) 1033 (ConversionsFire and Insurance Proceeds to 23 Rebuild); 24 (b) 1041 (Transfers of Property Between Spouses or 25 Incident to Divorce); 26 (c) 351 (Transfer to a Corporation Controlled by 27 Transferor); 28 (d) 355 (Distribution by a Controlled Corporation); 29 (e) 368 (Corporate Reorganizations); or 30 (f) 721 (Nonrecognition of Gain or Loss on a 31 Contribution to a Partnership). 32 Number references in the above subitems are to sections of the 33 Internal Revenue Code of 1986, as defined in Section 12640; 34 (2) a transfer of that portion of property subject to a life 35 estate or life lease retained by the transferor, until expiration or 36 termination of the life estate or life lease; 37 (3) a transfer through foreclosure or forfeiture of a recorded 38 instrument or through deed or conveyance in lieu of a foreclosure 39 or forfeiture, until the redemption period has expired; 40 (4) a transfer by redemption by the person to whom taxes are 41 assessed of property previously sold for delinquent taxes; 42 (5) a conveyance to a trust if the settlor or the settlor’s 43 spouse, or both, convey the property to the trust and the sole</p><p>[3272] 7 1 present beneficiary of the trust is the settlor or the settlor’s spouse, 2 or both; 3 (6) a transfer for security or an assignment or discharge of a 4 security interest; 5 (7) a transfer of real property or other ownership interests 6 among members of an affiliated group. As used in this item, 7 ‘affiliated group’ is as defined in Section 1504 of the Internal 8 Revenue Code as defined in Section 12640. Upon request of the 9 applicable property tax assessor, a corporation shall furnish proof 10 within fortyfive days that a transfer meets the requirements of this 11 item. A corporation that fails to comply with this request is 12 subject to a civil penalty as provided in Section 12373160(B); 13 (8) a transfer of real property or other ownership interests 14 among corporations, partnerships, limited liability companies, 15 limited liability partnerships, or other legal entities if the entities 16 involved are commonly controlled. Upon request by the 17 applicable property tax assessor, a corporation, partnership, limited 18 liability company, limited liability partnership, or other legal entity 19 shall furnish proof within fortyfive days that a transfer meets the 20 requirements of this item. A corporation, partnership, limited 21 liability company, limited liability partnership, or other legal entity 22 that fails to comply with this request is subject to a civil penalty as 23 provided in Section 12373160(B); or 24 (9) a transfer of an interest in a timeshare unit by deed or 25 lease; or 26 (10) a transfer of an undivided, fractional ownership interest 27 in real estate in a single transaction or as a part of a series of 28 related transactions, if the ownership interest or interests conveyed, 29 or otherwise transferred, in the single transaction or series of 30 related transactions within a twentyfive year period, is not more 31 than fifty percent of the entire fee simple title to the real estate; 32 (11) a transfer to a single member limited liability company, 33 not taxed separately as a corporation, by its single member or a 34 transfer from a single member limited liability company, not taxed 35 separately as a corporation, to its single member, as provided in 36 Section 12225(B)(1); 37 (12) a conveyance, assignment, release, or modification of an 38 easement, including but not limited to: 39 (a) a conservation easement, as defined in Chapter 8 of 40 Title 27; 41 (b) a utility easement; or 42 (c) an easement for ingress, egress, or regress;</p><p>[3272] 8 1 (13) a transfer or renunciation by deed, release, or agreement 2 of a claim of interest in real property for the purpose of quieting 3 and confirming title to real property in the name of one or more of 4 the existing owners of the real property or for the purpose of 5 confirming or establishing the location of an uncertain or disputed 6 boundary line; 7 (14) the execution or recording of a deed to real property for 8 the purpose of creating or terminating a joint tenancy with rights of 9 survivorship, provided the grantors and grantees are the same; 10 (15)(a) a conveyance by deed, distribution under a will, or by 11 intestate succession of real property, subject to the special four 12 percent assessment ratio pursuant to Section 12-43-220(c), to a 13 child or children of the grantor or decedent; 14 (b) a conveyance to a trust of real property, subject to the 15 special four percent assessment ratio pursuant to Section 12-43- 16 220(c), and the sole present beneficiary or beneficiaries of the trust 17 is a child or children of the settler; or 18 (16) a transfer of no more than a fifth of an interest in real 19 property by an individual or individuals to another individual or 20 individuals.” 21 22 B. Section 12-37-3150(A)(8) of the 1976 Code is amended to read: 23 24 “(8) a transfer of an ownership interest in a single transaction or 25 as a part of a series of related transactions within a twentyfive year 26 period in a corporation, partnership, sole proprietorship, limited 27 liability company, limited liability partnership, or other legal entity 28 if the ownership interest conveyed is more than fifty percent of the 29 corporation, partnership, sole proprietorship, limited liability 30 company, limited liability partnership, or other legal entity. This 31 provision does not apply to transfers that are not subject to federal 32 income tax, as provided in subsection (B)(1), including, but not 33 limited to, transfers of interests to spouses. The corporation, 34 partnership, sole proprietorship, limited liability company, limited 35 liability partnership, or other legal entity shall notify the applicable 36 property tax assessor on a form provided by the Department of 37 Revenue not more than fortyfive days after a conveyance of an 38 ownership interest that constitutes an assessable transfer of interest 39 or transfer of ownership under this item;” 40 41 C. This section applies for real property transfers after 2009. 42</p><p>[3272] 9 1 SECTION 3. Section 61320(A), as last amended by Act 116 of 2 2007 of the 1976 Code, is further amended to read: 3 4 “(A)(1) Notwithstanding Section 1237251(E), a local 5 governing body may increase the millage rate imposed for general 6 operating purposes above the rate imposed for such purposes for 7 the preceding tax year only to the extent of the increase in the 8 average of the twelve monthly consumer price indices for the most 9 recent twelvemonth period consisting of January through 10 December of the preceding calendar year, plus, beginning in 2007, 11 the percentage increase in the previous year in the population of 12 the entity as determined by the Office of Research and Statistics of 13 the State Budget and Control Board. If the average of the twelve 14 monthly consumer price indices experiences a negative percentage, 15 the average is deemed to be zero. If an entity experiences a 16 reduction in population, the percentage change in population is 17 deemed to be zero. However, in the year in which a reassessment 18 program is implemented, the rollback millage, as calculated 19 pursuant to Section 1237251(E), must be used in lieu of the 20 previous year’s millage rate. 21 (2) There may be added to the operating millage increase 22 allowed pursuant to item (1) of this section any such increase, 23 allowed but not previously imposed, for the three property tax 24 years preceding the year to which the current limit applies.” 25 26 SECTION 4. A. Section 1237251(E) of the 1976 Code is 27 amended to read: 28 29 “(E) Rollback millage is calculated by dividing the prior year 30 property tax revenues taxes levied as adjusted by abatements, 31 additions, and nulla bona returns by the adjusted total assessed 32 value applicable in the year the values derived from a countywide 33 equalization and reassessment program are implemented. This 34 amount of assessed value must be adjusted by deducting 35 assessments added for property or improvements not previously 36 taxed, for new construction, and for renovation of existing 37 structures, and assessments attributable to increases in value due to 38 an assessable transfer of interest.” 39 40 B. This section takes effect for rollback millage calculated for 41 property tax years beginning after 2009. 42</p><p>[3272] 10 1 SECTION 5. (A) There is created the Index of Taxpaying Ability 2 Study Committee. The committee shall be composed of eight 3 members, all appointed pursuant to subsection (B). The committee 4 shall examine the index of taxpaying ability and its relationship to 5 Education Finance Act resources available to the individual school 6 districts in support of the education foundation program required 7 by the State. The committee shall also examine the manner in 8 which the index is calculated and the impact of this act and other 9 property tax measures on the calculation. 10 (B) The committee shall be composed of: 11 (1) four members appointed by the President Pro Tempore 12 of the Senate; and 13 (2) four members appointed by the Speaker of the House of 14 Representatives. 15 (C) No later than January 1, 2011, the committee shall prepare 16 and deliver a report and recommendation to the Chairman of the 17 Senate Finance Committee, the Chairman of the House Ways and 18 Means Committee, the Chairman of the Senate Education 19 Committee, and the Chairman of the House Education and Public 20 Works Committee. 21 (D) Members of the study committee shall serve without 22 compensation for per diem, mileage, and subsistence. 23 24 SECTION 6. Section 12-37-3130(1) of the 1976 Code is amended 25 to read: 26 27 “(1) ‘Additions’ or ‘improvements’ mean an increase in the 28 value of an existing parcel of real property because of: 29 (a) new construction; 30 (b) reconstruction; 31 (c) major additions to the boundaries of the property or a 32 structure on the property; 33 (d) remodeling; or 34 (e) renovation and rehabilitation, including installation. 35 Additions or improvements do not include minor construction or 36 ongoing maintenance and repair of existing structures. This 37 issuance of a permit is not de facto proof of an addition or 38 improvement and is not conclusive evidence of an assessable 39 transfer of interest. The repair or reconstruction of a structure 40 damaged or destroyed by a disaster, to include, but not limited to, 41 construction defects, defective materials, fire, wind, hail, flood, 42 and acts of God, is not an addition or improvement to the extent 43 that the structure as repaired or reconstructed is similar in size,</p><p>[3272] 11 1 utility, and function of the structure damaged or destroyed, and the 2 rebuilding or reconstruction is begun within eight years after 3 determination of the damage or destruction. Construction of 4 facilities in a home that make the home handicap accessible is not 5 an addition or improvement if the utility and function of the 6 structure remains unchanged. The installation of a fire sprinkler 7 system in a commercial or residential structure when the 8 installation is not required by law, regulation, or code is not an 9 addition or improvement if the utility and function of the structure 10 remains unchanged.” 11 12 SECTION 7. Subarticle 9, Article 9, Chapter 60, Title 12 of the 13 1976 Code is amended by adding: 14 15 “Section 12-60-2570. For any appeal or protest brought pursuant 16 to this subarticle for an appraisal resulting from an assessable 17 transfer of interest due to a conveyance by deed, if the county 18 assessor determines the fair market value of a parcel of real 19 property and improvements thereon is higher than the 20 consideration given for the interest in the parcel, the county 21 assessor shall have the burden of proof of showing that the higher 22 fair market value is appropriate. This section only applies when 23 the assessable transfer of interest was an arms-length transaction. 24 In determining whether a transaction is an arms-length transaction, 25 it should be considered whether both the seller and the buyer are 26 willing, are not acting under compulsion, are reasonably well 27 informed of the uses and purposes for which the property is 28 adapted and for which the property is capable of being used, or any 29 other factor.” 30 31 SECTION 8. Article 25, Chapter 37, Title 12 of the 1976 Code is 32 amended by adding: 33 34 “Section 12-37-3180. (A) If this article effects the valuation of 35 a parcel of real property in which a licensed real estate broker, as 36 defined in Section 40-57-30(3), is acting in his capacity as a real 37 estate broker to sell the property, the real estate broker must notify 38 the purchaser of the real property in writing, before the signing of 39 the contract, of the estimated property tax in the year in which an 40 increase attributable to this article would first apply. The estimate 41 shall be based on the most recent millage rate and using the 42 assessment ratio that the purchaser intends to claim. The notice 43 must state which year’s millage rate was used in the calculation.</p><p>[3272] 12 1 The notice must be in a clear and conspicuous place on the seller 2 disclosure statement in large bold print. The purchaser must sign 3 directly underneath the notice stating that he has been made aware 4 of the estimated property tax. 5 (B) Any real estate broker failing to meet the requirements of 6 subsection (A) shall be investigated pursuant to Section 40-57-150 7 and is subject to disciplinary action thereof. There may be no 8 cause of action against a real estate broker for incorrectly 9 estimating the property tax unless the real estate broker was 10 grossly negligent or intentionally misleading in making the 11 estimate.” 12 13 SECTION 9. Except where otherwise provided, this act takes 14 effect upon approval by the Governor. 15 XX 16</p><p>[3272] 13</p>