Property Tax Reform Upon Us?

Friday, 06 March 2009
By Mike Fitts
SCBIZ Daily Staff

COLUMBIA -- Real estate would stop being reassessed automatically when it sells, a practice Realtors say is crippling South Carolina’s market, under a bill passed Wednesday by a House subcommittee.

The bill would put off reassessments until the county’s regular five-year cycle, according to S.C. Realtors Association CEO Nick Kremydas. Those in the real estate business have complained that immediate reassessments based on the sale price have brought a huge jolt, since the actual price has often been far more than the most recent assessment on the books.

It also would change the reassessments of properties that were sold since the sweeping changes in tax law went into effect in January 2007. Any properties affected so far would see their assessments rolled back to 2006 levels, Kremydas said. The bill does not include a refund for taxes paid in the interim, he said.

The bill was passed by a subcommittee of House Ways and Means and is expected to go before the full committee at the end of March, Kremydas said.

Top executives in the real estate industry have complained that the 2007 changes created huge inequities and disincentives to buy. When a property sells, its assessment can jump to far more than that of a similar property that has not changed hands. In many commercial leases, these taxes are passed onto tenants, who sometimes flee to other properties that have not been recently sold, Kremydas said. Others complain that the resulting higher taxes are putting off deals entirely.

The bill would have “a substantial effect on local (governments’) revenue, and that concerns us,” said Reba Campbell, deputy executive director of the Municipal Association of South Carolina. Campbell said her group would prefer that tax issues be addressed in a coordinated program rather than in a piecemeal set of bills.

Kremydas acknowledges that this is a short-term fix for one of many problems in the tax code. He said the association supports Senate Finance Chairman Hugh Leatherman’s plan for a tax commission to craft a long-term solution.

He said he understands opposition will be substantial, but he said the faltering economy makes it imperative that legislators fix the tax problem this year. “They should be embracing every opportunity they can to stimulate the economy at the state level,” Kremydas said.

Published March 6, 2009