Apr
22

S.C. Property Tax Law to be Changed Again?

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Bill aims to fix property tax reform fallout
Measure addresses unexpected effects

April 22, 2008

By Katy Stech – The Post and Courier

State lawmakers are trying to fix fallout from the property tax reform package passed two years ago, which protects longtime property owners from rising taxes but has been criticized as a deal-killer for some commercial real estate transactions.

A bill proposed earlier this month addresses what many lawmakers admit is an unintended consequence of the sweeping reform. It’s likely to pass before the session ends in June, but the legislation probably won’t satisfy many of the business community’s concerns.

Even so, some business lobbyists said they support the proposal because it buys them time to find a full solution.

“I think we all knew we were running up against the clock this year,” said Nick Kremydas, who heads the South Carolina Association of Realtors. “We still need to find ways to provide relief, but this gives us the time we need.”

Property tax reform’s main goal was to protect longtime property owners from having to pay dramatically higher taxes on their homes as soaring property values led to sharply higher assessments. Lawmakers created a 15 percent cap on reassessments, meaning the assessment on a property couldn’t rise more than that during each five-year reassessment period.

The catch is that if the property sells, it is reassessed almost immediately, usually at the full sale price. The increase shows up on the following year’s tax bill, in effect penalizing the buyer by raising the tax bill ahead of schedule and potentially by much more than 15 percent.

Business leaders blame that provision for slowing commercial real estate transactions across the state. Some say the law has damaged South Carolina’s business-friendly reputation.

The recently proposed bill changes that system slightly. Instead of properties undergoing reassessment in the year of the sale, the property would not be revalued until its next regular five-year reassessment. Essentially, the proposal keeps properties on the same reassessment schedule whether they’re sold or not.

State Rep. Bill Cotty, R-Columbia, drafted the proposal, which would take effect Jan. 1. Republican Ben Hagood is the only local representative who has signed on to the bill so far.

The bill’s quick pace through the legislative process so far is a promising sign that the House will pass the bill soon, said House Speaker Bobby Harrell, R-Charleston.

“I’m confident it’ll pass in the House, and there’s a very good chance of getting it through the Senate, but a lot of work still has to be done in a month and a half,” Harrell said.

Some lawmakers and business leaders say the proposal is less than perfect but will have to do for now. But it still leaves some in the business community dissatisfied.

Otis Rawl of the South Carolina Chamber of Commerce, one of the state’s strongest business lobbying groups, said he doesn’t like the law because it doesn’t relieve the burden on business.

“What this does for the real estate market is it hides the problem for (several) years,” he said. “I don’t know why they want to face the same wrath they faced several years ago over this.”

LINK TO ARTICLE HERE:
http://www.charleston.net:80/news/2008/apr/22/bill_aims_fix_property_tax_reform_fallou38121/

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