Realtors and mayors are on the opposite sides of a proposed change to property taxes that could impact millions of dollars in local government revenue.
Under a 2006 law known as Act 388, a building’s tax value resets whenever it is sold. Prior to 2006, the tax values would instead be reassessed every five years, whether or not the house or building changed owners. Called “point of sale,” it became a contentious issue in a House subcommittee hearing Tuesday.
Legislators are considering getting rid of the rule, a move that angers local leaders. Charleston mayor Joe Riley said the proposed bill would cost towns and counties $260 million each year in lost revenue as they simultaneously struggle with tighter budgets.
Realtors say the point of sale rule has hit the vacation home market particularly hard. But, Riley argued the proposed change is an attempt to help wealthier homeowners at the expense of others.
Advocates of this bill worry about second homes. Most South Carolina citizens are worried about the one and only home that they own. Under this bill, they will have a relatively higher tax burden.
Critics of the existing law say it can cause two homeowners with identical houses living in the same neighborhood to pay different tax rates. Realtors say the unstable growth in home values is driving away potential businesses when buyers learn their property taxes instantly increase after they make the purchase. Another problem is that Act 388 caps the tax increase on a piece of property at 15 percent over five years, creating inconsistency.
South Carolina Association of Realtors CEO Nick Kremydas said the law discourages a homeowner from moving to a new house, which drew a response from Rep. B.R. Skelton (R-Pickens), who opposed the bill.
Rep. Jim Merrill (R-Charleston) took a different tack, saying mayors were too concerned with losing money and not interested enough in reviving a crippled housing market. He took issue with mayors who criticized the bill as providing a “windfall” for the owners of expensive homes.
How is it a windfall when you make the money? How is that a windfall? Government can get a windfall. (For) the person who makes the money, that ain’t a windfall if you’re out there busting your butt trying to make a living.
The subcommittee passed the bill, which now heads to the full Ways and Means Committee Wendesday. A similar bill passed in the House last year before failing in the Senate.