This year's countywide reassessment revealed something unprecedented, though long expected -- a decrease in Beaufort County property values.
"In all reassessments prior to this one, values have increased," said county assessor Ed Hughes. "This is the first assessment we've had values decrease since Beaufort County implemented its first reassessment in 1973."
That won't mean a decline in property-tax receipts for local governments -- tax rates were adjusted upward to keep collections neutral. However, because the property values to which the rates are applied did not change uniformly, some owners could see their tax bills rise, even if their property values declined.
The owners most likely to assume more of the tax burden could be among those least able to afford it because low-priced property tended to retain more of its value during the recession.
But those on the other end of the spectrum -- longtime owners of high-end homes that skyrocketed in value before the market's collapse -- could also see their taxes rise at a higher rate than neighbors in more moderately valued houses.
This reality might be hitting home soon -- notices of new estimated values were mailed earlier this month and tax bills will follow in November, said county auditor Sharon Burris.
WHAT THE LAW REQUIRES
The value of real property must be recalculated every five years, according to state law. Most recent reassessments brought dramatically higher property values, but this year's is the first for Beaufort County since the housing market collapse brought much of the economy tumbling down with it. (The 2009 reassessment was based on values as of Dec. 12, 2007, just before the full brunt of the market crash.)
This year, assessed values in Burton, Lady's Island and the city of Beaufort fell the least, just 5 percent on average, according to a reassessment guide created by the Assessor's Office.
However, values in southern Beaufort County, which shouldered about 80 percent of the property tax burden in recent years, fell more precipitously. Values were down an average of 33 percent on Daufuskie Island, 21 percent in the Town of Bluffton and 17 percent in Windmill Harbor. Undeveloped residential lots -- found frequently in Bluffton, where values once boomed -- and condominiums -- found in high number on Hilton Head Island -- declined the most, Hughes said.
"All classes of property have dropped in market value, some more than others," Hughes said.
And that explains the disparate effect likely to be reflected in coming tax bills.
Property taxes are calculated based on three factors:
1. The "millage" or tax rate
2. The type of property being taxed
3. The property's taxable value.
The first factor varies throughout the county -- for example, a homeowner in the town of Port Royal will pay a different rate than someone in unincorporated Beaufort County. However, the rate is charged uniformly within tax jurisdiction.
The second factor affects how much of the home's taxable value the millage will be applied to -- for example, 4 percent of the value of owner-occupied homes, 6 percent for seasonal or rental homes. Although the rates vary and there are certain tax exemptions, for the most part, they are applied uniformly to each type of property.
But the third factor stands to redistribute the property-tax burden. After all, a municipality could raise its millage rate to offset a 20 percent decline in overall property value, but some properties might have lost 30 percent of its value and others just 5 percent.
THE EFFECT ON THE LOW END
Although owners of modest homes likely held on to more of their equity through the economic downturn, they could pay more in property taxes as a result.
Inasmuch as home values roughly correlate with income levels, that could mean the property-tax burden will shift a bit to those less able to shoulder it.
Median household incomes in Bluffton and on Hilton Head Island -- where property values declined most -- are $57,461 and $71,005, respectively. But in northern Beaufort County, the median household income falls short of the county's $57,133 overall median, according to U.S. Census Bureau data. In the Port Royal area, the median income is $44,619; in Beaufort, it's $48,969.
Higher tax bills could stretch already-thin budgets for working-class families and the unemployed in Beaufort, Port Royal and on St. Helena Island, some say.
"They just cannot afford it already, let alone tax increases," social worker Kari Baldwin said.
Baldwin works at the Salvation Army in Beaufort and helps families with property-tax bills every year, she said. The Salvation Army typically gives five families $125 each to help pay for mortgage, utility and grocery bills to free up income to pay property taxes.
"It's sad, it's very sad," she said.
That money usually isn't enough, and those families often have to go to other local programs for more help, like the Beaufort-Jasper Economic Opportunity Commission, Baldwin said.
And they aren't alone.
Some families don't qualify for assistance but are still dealing with unemployment, furloughs or growing bills; they will be in a tough position if their taxes go up after the reassessment, she said.
THE EFFECT ON THE HIGH END
Those on the low end of the income spectrum aren't the only ones who could see their tax bills jump. On the opposite end, owners of high-end properties who have lived in their homes for awhile could experience a marked hike, even if the assessed value of their home has declined.
State law protects homeowners from steep tax increases when property values rise dramatically, capping the increase in taxable value from one reassessment to the next at 15 percent if the property has not changed hands.
But the cap was designed for periods of escalating prices and doesn't afford protection to declining values.
Consider a home value that ballooned from $700,000 in 2003 to $1 million by 2008 -- a 43-percent increase in assessed value. However, the owner's tax bill would increase by 43 percent. Like 91 percent of Beaufort County property owners protected by the 15 percent cap that year, the owner would have been taxed as if the home were worth only $805,000.
If the same home lost 19 percent of its value between 2008 and 2013 -- dropping to $810,000 -- its taxable value would increase to the same amount. Thus, the homeowner's tax bill will rise even as the property value declined.
Hughes said he doesn't know exactly how many taxpayers will face such a scenario -- or even how many properties rose in taxable value -- because his office hasn't fully analyzed the latest assessment data.
Instead, Hughes and the Assessor's Office staff are fielding phone calls from and meeting with individual property owners to answer their questions about property values. The office has 16 staff members handling reassessment questions full-time and the office took about 4,600 calls about individual properties last week, Hughes said.
"Now that millage rates are published on web, (property owners) are calculating taxes, filing appeals and asking lots of questions," Hughes said. "When tax bills hit the street, that's when the fireworks will start."
Follow reporter Zach Murdock at twitter.com/IPBG_Zach.
Related content: Beaufort County still faces backlog of tax appeals, Sept. 1, 2013