In the latest legislative attempt to satisfy a top real estate industry concern, a House bill set for final approval today would postpone the tax increases that typically kick in when properties change ownership in South Carolina.
It's far less than what the South Carolina Realtors association wanted, but it would be a valuable concession.
The legislation would result in up to five years of tax savings for most property buyers, if the Senate were to go along, and would take a step toward addressing a law the group say has been harming real estate sales and the state's economy.
At issue are point-of-sale reassessments; the practice of changing a property's taxable value, increasing it to roughly the purchase price, whenever there's a change in ownership. The House bill would delay that increase in value until the next county-wide reassessment of all property values, which typically happens every five years.
"We just said, all right, if you buy a new home (counties) can value it at fair market value, but have to do it when there's a reassessment," said Rep. Jim Merrill, R-Berkeley, who is the lead sponsor. "We tried to find a middle ground."
The Realtors had wanted point-of-sale reassessments eliminated entirely.
That's what the House bill originally called for, but that bill had little chance of success and on Thursday was replaced with the new plan.
"At the end of the day, we wanted to repeal point-of-sale, and the votes weren't there to repeal it," said Nick Kremydas, CEO of S.C. Realtors. "We're not going to give up.
"I think it's a matter of keeping the ball moving, so that we can continue to put some pressure on the Senate and get some meaningful reform," he said.
Legislation delaying point-of-sale reassessments would cost local governments and schools about $40 million, based on a state estimate of similar legislation in 2009, according to Reba Campbell, deputy executive director of the Municipal Association of South Carolina. She said the association still has concerns. The S.C. School Boards Association is also reviewing the bill.
Merrill said that following final passage in the House, the Senate will likely assign the bill to a committee but not take the matter up until January.
The controversial point-of-sale reassessments began in 2007 after the state changed the way property is taxed, with large tax breaks for homeowners and limits on assessment increases so long as a property doesn't change hands.
The idea behind that law, Act 388, was to protect property owners from big tax increases for as long as they own their property, but to reset a property's taxable value to what it's really worth when the ownership changes. Then, the new owner's assessment is capped for as long as they own the property -- the assessment can rise no more than 15 percent every five years -- and the process is repeated.
Realtors and business groups have been trying to get rid of point-of-sale ever since Act 388 was passed. They say point-of-sale assessment changes are particularly troublesome for commercial properties, because tax increases can put the buyer at a competitive disadvantage with similar businesses whose taxes have not gone up.
In each of the past two years, the state House passed legislation sought by the Realtors, and the Senate killed it. Last year, the Senate was poised to approve broad reductions in point-of-sale reassessments as part of a deal between local government associations and the Realtors, but the Realtors association backed out at the last minute and demanded additional tax relief, which was not approved.
Reach David Slade at 937-5552.