Dear South Carolina Voter,
Last week you heard from us about The Stop the Unfair Tax campaign - which aims to educate South Carolina families and businesses about a flawed law called "point of sale." The current law allows local governments the right to charge higher property taxes when businesses are sold, or someone wants to buy a home.
What's worse is some local governments have seen a huge windfall from this tax, and even increased spending at a time when you and I have cut back. That’s not right, it’s not fair, and we must put a stop to this now! City and county government lobbyists are working hard to keep this unfair tax, but we can stop them if we work together.
We have a unique opportunity - THIS WEEK - to help fix this flawed law, and get our economy back on track. Together we can stop this unfair tax. It’s simple: go to http://www.itsjustnotfair.org/and:
1. Click “Take Action” and then the “Contact Your Legislator”;
2. Send an email (it takes less than five minutes) to your state representative and senator; and
3. Forward the message to your friends and family.
Let your voice be heard - use our action center to tell the politicians that it’s time to fix the unfair tax - and stop listening to special interests lobbyists for cities and counties - by supporting a current bill - HB 3272 - that will fix the problem, and help get our state’s economy moving again!
Sincerely,
Stop the Unfair Tax Campaign
PS-Please act today - the window to change this law is closing!
Paid for by the South Carolina REALTORS® Association.
Last week you heard from us about The Stop the Unfair Tax campaign - which aims to educate South Carolina families and businesses about a flawed law called "point of sale." The current law allows local governments the right to charge higher property taxes when businesses are sold, or someone wants to buy a home.
What's worse is some local governments have seen a huge windfall from this tax, and even increased spending at a time when you and I have cut back. That’s not right, it’s not fair, and we must put a stop to this now! City and county government lobbyists are working hard to keep this unfair tax, but we can stop them if we work together.
We have a unique opportunity - THIS WEEK - to help fix this flawed law, and get our economy back on track. Together we can stop this unfair tax. It’s simple: go to http://www.itsjustnotfair.org/and:
1. Click “Take Action” and then the “Contact Your Legislator”;
2. Send an email (it takes less than five minutes) to your state representative and senator; and
3. Forward the message to your friends and family.
Let your voice be heard - use our action center to tell the politicians that it’s time to fix the unfair tax - and stop listening to special interests lobbyists for cities and counties - by supporting a current bill - HB 3272 - that will fix the problem, and help get our state’s economy moving again!
Sincerely,
Stop the Unfair Tax Campaign
PS-Please act today - the window to change this law is closing!
Paid for by the South Carolina REALTORS® Association.
Posts
So I have a house under contract that is 150k lower than the last sold price in 2007 (no, not a short-sell). Should I really complaint? My property tax at the point of sell will be significant lower and there is no tax windfall for the government. Yes it is really unfair for my neighbors, but it is also the true capitalism at its best.
ReplyDeleteP.S. I still think I am taking a huge risk buying at house right now.
Well the current Point of Sale legislation does NOT require the taxing authority to roll back the tax on your new home if it is less than what the current assessment is and I assure you they will do everything they can to not let that happen.
ReplyDeleteThey can actually increase your tax by 15% of the purchase price. How can they do that when you have a lower sales price you ask? Well the Assessor’s office determines what comparable properties they want to use. And recently in a public forum a local Assessor admitted to Council members that they ignored what they called hardship sales because they didn’t believe that was the true value – I can tell you what someone is willing to pay is the true value. Regardless of whether it is a foreclosure or short-sale or divorce sale or someone just downsizing, what the buyer is willing to pay is the value. Maybe they will consider your purchase a hardship sale on behalf of the Seller and if your soon to be new home is assessed for more than your purchase price you could very well be paying more tax than you expect when your bill arrives in October.
Another way to look at this is from the tenant perspective. You have a store in a building and have a triple net lease - meaning you pay a portion of the tax, typical and the most common form of commercial leasing. Your building is sold and when it is sold the tax goes up significantly, now you the tenant must cover that increase - how do you do that in this economy?
Or look at it from the perspective that you buy your new home for $200,000 a great buy and it is less than what the previous owner paid for it. But the same exact house next door hasn't sold so it pays significantly less tax than you do. That is inequality of tax, it just isn’t fair.
And at the end of the day why should government spending balloon based on a change in the taxing system. The burden of paying for government services should not be paid by those recently purchasing a primary residence or someone buying a rental property or the tenant in a commercial space or even by the children of an elderly parent that transfers a house to them.
Sadly this has nothing to do with capitalism, it is all about government greed and balancing inflated budgets. I would encourage you to find out what the home you are buying is assessed at on the tax roll and look at how much that owner is paying and then look at how much you will be paying – it isn’t about what the original sales price was, it is about what the assessed value is.
If you can’t find that information online, send me the address and I will pull the tax roll for you.
So you are saying, I will be paying more property tax than the previous owner? I just don't see how this work. My next door neighbor paid 800k for his house, so you said he will pay less when my house is significant lower value at point of sell? Doesn't make sense at all. My real estate agent is saying my tax will be significant lower. I told you what's a true fair tax, we can redefine the property value every year and adjust the tax accordingly. However, this is not what they are proposing right? They just don't want to pay any taxes or significant less taxes. :)
ReplyDeleteWithout knowing the current tax appraised value of the property I can’t tell you if you will pay more or less than the current owner when you close. But I can tell you that if your new tax appraised value (your purchase price, fair market value) is less than what the current owner pays you will have a very difficult time getting the tax appraised value changed by the county your are purchasing in.
ReplyDeleteIt is important to understand why we ended up with Point of Sale.
Carl Beckmann, Mayor of Folly Beach, explains it best in a 2009 Letter to the Editor, “In 2006, tax reform legislation known as Act 388 was passed in an effort to keep long-time homeowners from being taxed out of their homes. This legislation effectively gave a segment of our state's population living in rapidly appreciating neighborhoods a tax break that owners in slower appreciating neighborhoods did not get.” I do want to point out Mayor Beckmann is again the current Point of Sale until the entire tax structure of the state can be changed, and I don’t see that happening anytime soon.
He goes on to write, “The intent of Act 388 was to make sure long-time homeowners were not taxed out of their homes when larger more expensive homes were built around them. The intent was not to pass on the tax break to subsequent owners of the property, which defeats the primary intent of the provision. While Act 388 needs to be revisited by the Legislature because of the inequities it created for business owners and homeowners in slowly appreciating neighborhoods, both business leaders and local elected officials recognize that this is a lot easier said than done.”
Prior to 2006, taxes were based on assessments that occurred every 5 years. So depending on the age of the property and the current stage of assessment you may very well pay more in tax than the current owner. And since taxes are paid in arrears most did not actually see a change in tax bill until this year. The bill you pay in 2009 is for taxes during 2008. And Point of Sale did not kick-in until like June of 2007 I believe.
It would be great if you neighbor’s taxes where lowered when your home closes, but the county has the right to “not” included a sale that they deem to not be fair market value, FMV - it is happening everyday, this isn’t a theoretical situation, it is reality.
CONTINUED:
ReplyDeleteIt is about establishing equitable tax and not placing the taxing burden of local government and school districts on a certain segment of the population. No one is suggesting that property tax go away.
For example is it fair that my home could be worth significantly more than the one you are purchasing but I pay less tax than you because I purchased my home before 2007 and you didn’t purchase until 2010?
I just pulled a tax record for a house in Wild Dunes purchased on 12/17/2008 for $900,000. Now you know the market if you are buying a home, but the total tax appraisal is $1,716,000. Now ask yourself how can that be a true valuation, when values on Isle of Palms have plummeted. I have not seen the market increase over 50% on the Isle of Palms during 2009 or anywhere in the country.
Or how about a single family home in Charleston that sold 5/1/2009 for $915,000, that only has a tax value of $485,000 compared with the home in Beresford Hall that sold for $950,000 on 1/27/2009 that has tax appraisal value of $835,600. Compare that to the house in Wild Dunes that sold for less, but pays a larger share of the tax.
These are just a couple of examples, there are many more. Or maybe you could related to my client that paid just above $5,000,000 for an investment property in 2008 that now has a tax appraised value off close to $6,200,000. How can that be, property values have not increased during 2009, they have been declining since late 2007. All of these property owners can show that the value they paid does not exist any longer, but because of Point of Sale, we are left with inaccurate values. And many of our local governments see this issue as a blank check
My personal opinion, not that it matters, is that everyone needs to be treated the same, regardless of when the house was originally built or when you purchased the home and if that means I have to pay higher property taxes on my personal home then so be it. But I should not pay less tax than you do because you didn’t buy your home until AFTER the Point of Sale legislation when into effect.
My offer still stands, if you would like for me to tell you the best estimate of you tax compared to the current tax being paid shoot me over the address and I’ll run it.
If Point of Sale benefits you, you will be one of the rare few, unfortunately you will not know the out come until October 2011. And should something on your street have sold for more than your purchase price as of 12/31/2009 your tax most certainly will be more than your purchase price, as taxes are paid in arrears. So your bill on Oct 2010 will be the value of your property as of 12/31/2009 and your bill in Oct 2011 will be your value as of 12/31/2010.
Thank you for the offer. However, I do know how to check the tax record and most ones I checked sold home in 2009 (in downtown and island of palm has lower or equal tax appraisal value to the sold price...) The major differences are mainly the primary/investment property rate. Public information online is a scary and yet powerful thing. Without exact address, I can really judging your examples, for example, the IOP could be a short-sell and was originally apprised even greater than 1.7 million (i.e. before the sell it was at 2.5 million).
ReplyDeleteNope none are short sales that I referenced and were never valued that high. It is the evidence why POS is not good for anyone over time.
ReplyDeleteAnd even if it was as short sale it should be recorded at the FMV, that is the Point of Sale legislation as you know it right? And why the conversation started - your conviction that POS was positive for you because your tax would be less than the previous owner.
But you are correct it is a matter that greatly impacts commercial property and investment property and 2nd home properties that is a direct impact to our local economy that is service oriented and it affects those buying residences from 2007 on.
But just keep in mind the tax bill you see online today is a reflection of the value according the to the tax appraisal as of Dec 31, 2008, NOT the value as of Dec 31, 2009, so your search results to determine the true effect would not be as accurate as if you were to examine sales in tax appraisals in 2008 for sales and then to cross reference similar properties that were not sold. That establishes the true inequity regarding to Point of Sale.
Best of luck to you in your new home, it really is a great market for a Buyer!