SC Administrative Law Court Decisions

I. Introduction

Truman McAlister and Wayne B. Elmore (taxpayers) seek an order finding the value of their property located in Anderson County to be $150,000 for the 2002 tax year. The Anderson County Assessor (Assessor) opposes the taxpayers' position and asserts the subject property must be valued at $310,000. Jurisdiction is in the ALJD under S. C. Code Ann. § 12-60-2540(A) (Supp. 2002).

After examining the evidence and the arguments made, the assessor’s value of $310,000 is the proper value for the 2002 tax year.

II. Analysis

A. Findings of Fact

I find by a preponderance of the evidence the following facts:

1. Background Facts

The property in dispute is identified as TMS #150-00-04-006. It is located at 2514 Belton Highway, a four-lane highway in Anderson County connecting the City of Anderson to the Town of Belton. The site houses an eleven year old average condition structure constructed as a supported metal frame building with brick veneer exterior walls. The interior of 5,575 feet is designed and outfitted as an office building. The property has approximately 140 feet of frontage on Belton Highway.

The land was purchased and the building was constructed in 1991 with a land cost of $55,000 and a construction cost of $255,000. Upon completion, the office building began producing rental income over a 9 year period via a lease with Liberty Life Insurance Company. The lease paid a gross rent of $36,000 per year. However, the building became vacant in June 2000.

On March 16, 2001, the taxpayers purchased the property for $150,000. However, the property remained unoccupied through the 2002 tax assessment date of December 31, 2001.

2. Comparables

Since being constructed in 1991, the property under review has carried an annual value for tax purposes of $310,000. In supporting the land value of $55,000 for the 2002 tax year, the assessor relied upon four sales of vacant land.

In like manner, the assessor relied upon four sales of similar properties to support the overall value of $310,000.

The taxpayer has presented no sales of any comparables. Instead, the taxpayers rely upon the $150,000 purchase price paid in March 2001 as indicative of the property’s value.

B. Conclusions of Law

Based on the findings of fact, I reach the following conclusions of law:

"The proper valuation of realty for taxation is a question of fact to be ascertained in each individual case in the manner prescribed by statute." 84 C.J.S. Taxation § 411 at 793 (1954). For South Carolina, the manner prescribed by statute is that of determining the property's "true value in money." S.C. Code Ann. § 12-37-930 (Supp. 2002). "True value in money" is the property's fair market value (Lindsey vs. S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990)) with fair market value being that amount which a willing buyer would pay to a willing seller. S.C. Code Ann. § 12-37-930 (Supp. 2002).

In establishing fair market value, an appraisal that uses market sales of comparable properties presents probative evidence of the fair market value of a similar property. 84 C.J.S. Taxation § 411 (1954); See Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988). However, such an appraisal cannot be treated as an exact science and the precise weight to be given to any factor in an evaluation is necessarily a matter of judgment to be determined in the light of the circumstances reflected by the evidence in the individual case. Santee Oil Co., Inc. v. Cox, 265 S.C. 270, 217 S.E.2d 789 (1975). Indeed, in making such comparisons of properties, all elements or incidents which affect market value or would influence the mind of a purchaser should be considered, such as location, quality, condition, and use. 84 C.J.S. Taxation § 410 at 784; § 411 at 794 (1954). One such relevant factor having some bearing on the mind of a purchaser is the recent purchase price of the property under review. Belk Dep't Stores v. Taylor, 259 S.C. 174, 191 S.E. 2d 144 (1972) (holding that the purchase price of property is some evidence of value).

Thus, in this case, the valuation of comparable properties lends support to the assessor’s value while the purchase price paid by the current owners lends some support to the taxpayer’s value. However, overall, I conclude the assessor’s value is the more persuasive.

In this case, the assessor’s determination produces a fair market value per square foot consistent with similar property. Using the assessor’s value of $310,000, the value per square foot for the taxpayers’ building of 5576 is $55.60 per square foot. Such a value is supported by comparable office space of varying but similarly small-size buildings which show a range of values per square foot of a low of $50.63 to a high of $86.92.

On the other hand, the taxpayers’ value of $150,000 results in a value per square foot of only $26.90. No sale supports a value as low as $26.90. In fact, the taxpayers’ value is less than half the square foot value of even the lowest value of comparable property.

Further, the only sale in the evidence which supports the taxpayers’ assertion is the $150,000 price the taxpayers paid to purchase the property in March 2001. Such a purchase price is abnormal given the sales of other similar properties which sold for much higher values. Indeed, the value suggested by the taxpayers is more than $100,000 less than even the $255,000 cost of constructing the building alone. Such evidence diminishes the weight to be attributed to the purchase price of $150,000. Accordingly, considering all the evidence as a whole, the value of $310,000 is the supported value of tax year 2002.

III. Order

The property identified as TMS #150-00-04-006 located in Anderson County at 2514 Belton Highway and owned by Truman McAlister and Wayne B. Elmore is valued at $310,000 for tax year 2002.

AND IT IS SO ORDERED

______________________

RAY N. STEVENS

Administrative Law Judge

Dated: September 10, 2003

Columbia, South Carolina