Realtors, governments reach compromise on point-of-sale reassessment legislation

Realtors and local government groups that have been at odds over proposed changes in the state’s point-of-sales property tax laws reached a compromise Tuesday, according to the Municipal Association of South Carolina. Now that a deal both sides support is in place, legislation changing the point-of-sale policy could move forward in the S.C. Senate today, said Miriam Hair, executive director of the Municipal Association.

By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published Jan. 20, 2010

Now that a deal both sides support is in place, legislation changing the point-of-sale policy could move forward in the S.C. Senate today, said Miriam Hair, executive director of the Municipal Association.

Hair said Sen. Robert Hayes, R-Rock Hill, and Sen. Thomas Alexander, R-Walhalla, had told the opposing sides they needed to agree to a bill before it could move forward. The groups had been working on a deal since June.

Under the compromise, commercial properties and second homes that sell this year would not be taxed based on the sale price, as required under the current point-of-sale reassessment policy. Taxes on those properties would not change as a result of a sale.

Commercial properties and second homes that sell in 2011 would be subject to a point-of-sale valuation, but the increase would be capped at 40%.

In 2012 and in all subsequent years, the property value increase following a sale would be capped at 80%, Hair said.

The deal leaves point-of-sale valuation in place for owner-occupied properties.

Realtors in the state have called for eliminating the policy that state lawmakers adopted in 2006 that raised the taxable value of a property to its sales price when it changes hands. Realtors said that policy was creating inequities in properties and hurting sales, especially for investment properties.

Nick Kremydas, executive director of the S.C. Association of Realtors, could not immediately be reached for comment on the compromise.

Local government groups, including the Municipal Association, the S.C. Association of Counties and the S.C. School Boards Association had opposed getting rid of the point-of-sale law.

Several provisions in the state’s 2006 property tax reform reduced the revenue growth available to local governments, and those groups said eliminating the point-of-sale provision would further constrain their budgets. They also said it is fair to tax property based on a price the new owner agreed to pay.

Hair said the local government groups agreed on the one-year elimination of point-of-sale valuation as a way to jumpstart commercial sales in a tough economy.

While that change would not apply to owner-occupied homes, Hair said senators involved in the compromise pointed out that homeowners got a major tax break from 2006 statewide property tax reform. State lawmakers raised the state’s sales tax and used the revenue to replace a portion of property taxes that pay for public school operations, but only for owner-occupied properties.

Also, Hair said, homeowners and homebuyers have been eligible for recent stimulus-related tax credits from the federal government.

An earlier version of the bill changing point-of-sale valuation called for a five-year sunset clause. Hair said that is no longer in the bill.

Also in the compromise is a change to the rules cities, counties and school districts must follow in their annual budgeting. The 2006 reform prohibited local governments from raising millage more than the combined annual growth in population growth and the consumer price index.

Hair said that provision has led to a “use it or lose it” mentality among some local governments. The deal worked out Tuesday would allow local governments to claim the allowed increase two or three years down the road if they don’t need to raise taxes in a given year.

That provision could lead to fewer tax increases among local governments, Hair said.

Reach Ashley Fletcher Frampton at 843-849-3129.