Wednesday, January 20, 2010

Point of Sale Tax is South Carolina's Business Noose
For the sake of time, I'm going to dive right in with a quick illustration.

Three years ago a Bobby bought condo Unit-101 at William's-Brice Stadium for $500,000. Today five other people purchase the same exact condos that are adjacent to the Unit-101 for $200,000. Under current law, Bobby is still forced to pay a rate based on his $500,000 sales price even though the condo is clearly only worth $200,000. Unit-101 looks like 200K, smells like 200K and appraises at 200K...but is taxed at $500K. This is not right.

Bobby can't possibly sell his unit nor can he rent it to cover his tax burden. He also can't pay his tax bill. Bobby is trapped and the next step is foreclosure.

For further thoughts, blogs FitsNews and PalmettoScoop have posted about the Realtors efforts to change the law. Further still, the SC Association of Realtors created Facebook and Twitter pages as they try to gather support for the cause.

South Carolina has completely shot itself in the face. Property owners everywhere are trapped into tax burdens that don't fit the value. It's a wreck.

Consider the same situation for an office building or skyscraper. The tax burden is out of the stratosphere. Given the situation, out of state investment is completely halted.

We can tout having "Smiling Faces" and great beaches but this is not enough to battle our terrible Point of Sale tax situation. Any state senator that acts as an obstructionist to the bill before them clearly doesn't have South Carolina's best interest in their hearts.

The state senate has a South Carolina stimulus bill in its chamber. They need to act and get this noose off of our necks.

4 comments:

TDH3 said...

Franklin - In reality, many counties are not honoring point of sale even on new purchases when the purchase price is lower than the previous amount paid. Sure you can protest and they listen and might drop it a little but in the end these counties are not budging much on the reset value.

Counties have built budgets around the assumption that property values will not drop. Well now they have, in some cases dramatically, yet these counties are not dropping the tax values with the property. Instead they argue that the assessment is based on a previous year and they will re-assess every five years. Never mind the fact that I just paid $100,000 for a home that sold three years ago for $200,000. I am still forced to pay the same, or close to the same, amount that the previous owner was paying at $200,000.

So is it bad law or just typical government or both? Whatever it is, it is a disaster. It’s bad for municipal budgets, bad for property owners, bad for renters and bad for business.

Thanks for the work you are doing on this and for keeping your fan base up to date. Please start posting names of legislators we should call or write to get some movement on this issue.

Anonymous said...

Let's also not forget another angle to the problem. Whenever a property changes hands at a value greater than that previously assessed by the county, taxes are then based off the sales price.

While some might argue it just makes sense to assess property taxes on what someone pays for a home, it becomes completely unreasonable when the next door neighbors, who have larger, nicer homes, pay significantly less in taxes just because they've been there for a while (thus there hasn't been a new sales price to readjust taxes to).

Pick any street in the state where a home has changed hands. Compare taxes per square foot on homes that have changed hands since 2007 to homes that haven't. You will immedietly see the difference.

The Point of Sale bill rewards those who stay put by capping property tax increases and replacing the schools portion of property taxes with an extra penny sales tax (the nice property tax decrease folks saw in 2007). It punishes those wishing to move/purchase property by drastically increasing their tax rate after the sale. And we wonder why people aren't moving as much. It's not just because of the economy.

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Anonymous said...

Everyone I know that wants to protest is frightened to let the assessor in the house for fear they will up the value based on improvements. This attitude gives Richland a tremendous leg up.

How fair is it that the neighborhood homes were computer valued for the reassment and everyone in less desirable locations were lumped in as well?
Check out the increase in your lot value. It's unjustified.

How fair is that no one that didn't protest their value got no scrunity (except the computer)and someone like myself who did protest had three visits inside?

In the end my assessed value was lowered and that made the fight worth the effort.

These guys go back many years to shovel high comps to you but the bank uses only the last 3 months comps 1.5 miles from your home before they'll lend you money.

Also, why are 6% investment owners so overburdened? I pay $2000 on a 2/1 that I have to rent for 5 months to make back the taxes. You can't pass it on to renters--they simply don't have it. Something needs to be done for the real estate investor.