Builders with unsold houses get tax break

HOLLYWOOD -- Charleston contractor Chuck Bennett was frustrated with paying more than $16,000 a year in property taxes on two houses he built here but could not sell, so he set out to change the law.

And he succeeded.

Beginning this fall, a developer or a contractor like Bennett who has completed a new detached, single-family home that has not been sold or rented no longer must pay taxes on the home. They still must pay taxes on the land, however.

Bennett figures he will save about $7,000 on a four-bedroom, four-bath home he completed in 2006 but which has remained on the market even though the asking price has dropped from $1 million to $635,000.

Bennett said the new break is fair because the unoccupied houses place little or no demand on local governments, which rely on property tax revenue. "I'm just writing a check for nothing," he said.

Local builders who want to apply for the exemption must do so with their county assessor office by Sept. 30. The deadline for applying next year will move up to Jan. 31.

State lawmakers liked the idea so much that they not only passed the bill -- and then voted overwhelmingly to override Gov. Mark Sanford's veto -- but also extended the exemption from three to five years after the home first receives a certificate of occupancy.

In his veto message, Sanford said it was unfair to exempt unoccupied new homes. "In short, taxpayers provide financing in support of residential development and will now be asked to maintain more of it because homes are not sold," Sanford said. "This hardly seems equitable to those who already shoulder a significant tax burden at the local level."

Sanford also said he wanted to see a more holistic approach to tax reform.

Statewide, the break is expected to cause local governments to lose about $1.5 million in property tax revenue, based on an estimate of 500 homes being taken off the tax rolls. That's a tiny fraction of statewide property tax collections.

Still, local governments are wary because they have no way of knowing whether that estimate will ring true.

Charleston County Assessor Toy Glennon doesn't know how many will apply.

"I have absolutely no way to estimate it," she said. "Things (like Bennett's Hollywood house) that were on the tax roll last year may come off this year. ... It will immediately have an impact. How great that impact is, who knows?"

Phillip Ford of the Charleston Trident Home Builders Association said he isn't sure how many local homes will be taken off the rolls but estimated it would be fewer than 100.

Ford said that loss of tax income to cities, counties and schools is worth it because of the potential help it will provide to a struggling industry. "This could really make or break somebody," Ford said.

Bennett, who won a Builder of the Year award in 2006, said he recently met with five other past presidents of the Charleston Trident Home Builders Association to talk about charitable work.

After the meeting, Bennett said, only he and one other went back to work. The four others went home.