Realtors withdraw support for tax plan

Legislation that would significantly change the way property is taxed throughout South Carolina has become a fast-moving target, after a compromise plan failed this week.

The S.C. Association of Realtors formally withdrew its support Thursday for a legislative compromise that would have created property tax breaks aimed at spurring commercial real estate sales.

The Realtors now want bigger tax breaks, and they want them extended to residential property as well.

The compromise plan had been agreed upon Tuesday afternoon and the legislation was introduced in the Senate on Wednesday, but later that same day, the Realtors declared the plan "on hold."

Nick Kremydas, CEO of the association, said the group's board rejected the compromise plan because it did not cover owner-occupied homes. "Our members are being impacted not only on the commercial side but on the residential side as well," he said. "This is about fairness."

Kremydas also said the legislation was not exactly what Realtors had agreed to.

"I don't know about the Senate, but I can tell you our patience is wearing thin," said Scott Price, general counsel for the South Carolina School Boards Association. "At least from the local government perspective, we're trying to negotiate in good faith."

The tax breaks sought by Realtors would only apply to properties sold after Jan. 1, and those breaks involve exemptions from the property reassessments that are triggered when properties change ownership.

Such reassessments became a part of South Carolina property taxation in 2007, after voters approved a constitutional referendum to allow the practice. The idea was to cap tax assessments for longtime residents, while allowing assessments to rise to market value when properties are sold.

Sen. Thomas Alexander, R-Walhalla, was lead negotiator on the compromise plan, and met with the Realtors and government associations Thursday after the deal fell apart.

Alexander said there's general agreement that reassessments triggered by property sales are causing problems, and his goal is to spur investment and boost the economy by creating incentives to buy property now rather than later.

Struggling schools and local governments are concerned because any exemptions from what is known as "point-of-sale" reassessment would mean less money for them, which could result in reduced services or higher tax rates.

"We had found common ground, and the Realtors had agreed to a compromise that we thought was generous on behalf of the cities, counties and schools," said Miriam Hair, executive director of the Municipal Association of South Carolina.

Here's how the Realtors' demands have changed:

--The compromise plan would have exempted most property except owner-occupied homes from point-of-sale reassessment in 2010. Properties sold in 2011 would have gotten reduced reassessments, and in 2012 and beyond, commercial point-of-sale reassessments would have been capped. The cap in 2012 and later would have been 80 percent of the difference between the old assessment and the market value of the property, so a property assessed at $100,000 and sold for $300,000 would have been reassessed at $260,000.

--Now, the Realtors want point-of-sale exemptions in 2010 for all commercial and residential properties, and they want to limit point-of-sale reassessment increases in 2012 and beyond to 60 percent of the sale price. That means the property selling for $300,000 could be reassessed at $180,000.

The Realtors, senators and government associations are scheduled to meet again Monday. "We'll give it a few days, and if we can't be successful, then we can't be successful," Alexander said. "I think that in order for it to be successful, it will have to have everyone's support."

Reach David Slade at 937-5552 or dslade@postandcourier.com.