Monday, March 9, 2009

Point of Sale is Choking South Carolina


State Must Address POS Policy; Schools Suffering
This article in The State Newspaper may seem long and a little boring to most people, but the subject matter is sort of a big deal.

The POS "Point of Sale" policy that was voted on in 2006 has not only affected real estate sales, but our schools as well.

Here's the rub; When we voted for the property tax relief provision, we were largely voting for a tax break on our primary homes. Great! The plan was to replace this with a larger tax on secondary homes, investment and commercial property. To help even more, we inched up the sales tax on goods sold. Sounds wonderful!

Here's the problem. Taxes on investment property has absolutely skyrocketed. Commerce has all but halted in the commercial real estate industry and out of state investors are taking their money elsewhere. That's only one side of the story.

The other problem is that even though the sales tax on goods was increased to compensate for the property tax reduction ...No One is Buying Anything!

I have to admit I thought it was a great swap. Actually, almost all of us thought that it was a great idea for us to lower our four digit property tax as we "financed" it via purchasing a computer, tennis balls or whatever you can think of.

The logic runs far deeper than I can type about in this post. All I know is that something has to be done and soon.

Out of state investors are tearing up their sales contracts, rental properties are now "upside down" every month and some schools can't even afford substitute teachers. The entire new system has created at plethora of problems.

The reason the law is going to be so difficult to alter is because taxes on primary homes has been reduced, which we are all in favor of. Since it's obvious no one wants to change this part of the law, we're in a precarious situation.

I don't have the perfect answer, but something has to happen...quickly.

1 comment:

Madison said...

For a $150K second/investment home:

Taxes on Lake Murray are $3.5K
Taxes on Lake Thurmond are $2.5k

If you cross the US-378 bridge over Lake Thurmond and buy a house on the GA side of the lake the taxes will only be $1.5K.