The South Carolina Senate resumed debate Thursday, but reached no conclusion, on a plan to change to the statewide property tax system by capping the reassessments of properties that change ownership.
If approved, the proposed changes would mean smaller tax increases for those buying property, and an estimated $44 million annual revenue loss for local governments and schools. Currently, properties are reassessed at their full market value when there's a change in ownership.
Some senators expressed concern about the impact on schools during Thursday's floor debate.
Others, in support of the bill, said the changes are needed to spur real estate sales and investment.
For most South Carolina residents, the proposed changes could mean higher property tax rates, or reduced services, because local governments and schools would get less revenue than without the changes.
The legislation has been a moving target, however, and the plan could change substantially through amendments. Debate is expected to resume Tuesday when the Senate reconvenes.
Just two weeks ago, a plan representing a compromise between the S.C. Association of Realtors and associations representing municipalities, counties and school districts was presented in the Senate, only to die by the end of the day when the Realtors withdrew their support.
That plan would have temporarily suspended point-of-sale reassessments on commercial properties and second homes and capped reassessments on those types of properties in future years.
The Realtors demanded that point-of-sale reassessment caps apply to residential properties as well, and the proposal now on the Senate floor would do that.
It's not a new plan, but one from last year from the Senate Finance Committee. The plan calls for capping point-of-sale reassessments on residential and commercial property at 15 percent.
That means that if a property with a taxable value of $100,000 is sold for $150,000, the new taxable value would be capped at $115,000, instead of rising to the full market value of the property.