How to avoid paying too much property tax for a car or truck
Feb 15 2015 9:00 am
On Feb. 8 and 9, The Post and Courier published my investigation of South Carolina’s system for taxing cars and trucks, and the findings should be a wake-up call for everyone who owns a vehicle.
The takeaway, when it comes down to your money, is that you may be paying too much property tax because the state may overestimating what your vehicle is worth.
This is particularly important with newer vehicles, because annual property taxes are based on value. If the state overvalues a 12-year-old car by 40 percent, the owner might pay an extra $25 in tax, but if the state overvalues a newer car by 40 percent, it could cost the owner hundreds of dollars.
That’s what happened to one of the people interviewed during my investigation: Tammy Richardson of Summerville. In her case, the car had been greatly overvalued — and overtaxed.
She received a $630 Dorchester County property tax bill for a 2013 electric Ford Focus she leases because the state had decided it was worth more than $31,000.
Richardson appealed to the county auditor’s office, and they agreed the car was really worth $17,170, which knocked nearly $300 off her tax bill.
“People could be saving a lot of money if they knew (to appeal),” she said.
How do these mistakes in car-taxing happen? It’s a combination of errors that can happen at the state or county level, and structural flaws built in to the system.
The state buys a database of vehicle values every year from a New York publisher, Penton Media. Every county is required to use those values to calculate their property tax bills. The public isn’t allowed to see those values, except for the ones individuals will see on their own tax bills.
They are supposed to be low-ball values — the ones used by banks to approve car loans — which means they should always be lower than actual retail prices. But in fact, it’s not uncommon for people to get tax bills that show higher values for their vehicles than the prices paid to buy them from a dealership.
And even if the values are right on target, they are averages, and they are calculated just once each year, in December. So, someone whose tag expires in, say, November, would get a tax bill based upon what their car was worth nearly a year earlier.
So, what do you need to do to make sure you aren’t paying too much?
If you have an older car, and you replace it with a newer one, make sure to transfer the tag. That way, you won’t get
a bill based on the newer car’s value until that tag expires.
When your annual property tax bill for a vehicle arrives, look at what the state is assuming your vehicle is worth. That’s typically listed as the “appraised value” on a bill. The “assessed value” is a much lower number, a fraction of the appraised value that’s associated with the use of the vehicle (generally, 6 percent for personal vehicles and 10.5 percent for commercial vehicles).
To see if the appraised value is reasonable, check one of the reputable, free, car-pricing websites such as Kelley Blue Book (kbb.com) or NADA (nadaguides.com).
Know the deadline to appeal. Unlike the taxable value of a home, the taxable value of a car can by appealed only during a narrow window each year. You won’t know what that taxable value is (it changes yearly) until you get your bill, and then you’ll have until 30 days after the tax bill was mailed or the last day the tax can be paid without penalty, whichever is later. That date is typically the end of the month when your license tag expires.
Know the rules in your county. In some counties, including Berkeley and Dorchester, it’s easy to appeal because the auditor’s office will look up your vehicle’s value online, but the result of an appeal is only good for that one year. In other counties, such as Charleston, auditors require written appraisals from car dealers, or a bill of sale from a dealer if the car was recently purchased.
In addition to challenging the value of a car or truck, taxpayers can get a discount if the vehicle has unusually high mileage. That discount must be applied for annually, and tends to knock 10 percent to 15 percent off the tax.
The high mileage standard is more than 15,000 miles per year, based on the model year. For this year, a 2015 model year car would need to have 15,001 or more miles on the odometer to qualify; a 2005 model would need 160,001.
There are also total exemptions from the tax for totally disabled veterans, people who have a permanent need for a wheelchair, veterans who were prisoners of war, and members of the armed forces stationed in South Carolina whose home of record is another state. Check with your county auditor if you fall in any of those categories.
In some cases, the exemptions extend to two vehicles owned or co-owned by the person who qualifies. So, for example, the spouse of a totally disabled veteran could avoid property tax on a vehicle if they jointly own it.
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