Apr 24 2008
Cotty Proposes Property Tax Break on Home Purchases
Currently, state law mandates that property values are to jump from the assessed value to the market value for tax purposes when the property is bought or extensively renovated.
A bill that passed the state House unanimously Wednesday would delay that increase until each county does its next five-year reassessment. Beaufort County’s next reassessment is in 2009.
The bill faces another vote in the House before moving to the Senate.
The bill’s sponsor, Rep. Bill Cotty, R-Columbia, says thousands of real estate contracts in South Carolina have fallen through as an unintended consequence of the property tax law approved two years ago.
Local Realtors applaud the new bill. Because assessed values are typically well below market values, home buyers can face taxes that are double what the previous owner paid, said Linda Palmer, president of the Hilton Head Area Association of Realtors and a Realtor with Keller Williams Realty.
“It’s a very good thing,” she said. “We totally support it.” Tom Jackson, broker-in-charge at Gateway Realty, agreed the bill could spur home sales.
“It’s not a major thing (causing slow sales),” Jackson said, “but every little thing helps when you’re in a slower market.”
I don’t understand why so many governments struggle with this issue. I think the current law should stand instead of making it more complicated. If you pay $150,000 for a house then you should pay taxes based on the $150,000. Whether or not the previous owner only paid on $125,000 is irrelevant. The house is now worth more. It doesn’t make sense to me to stave off the higher assessment for two or three years. You should go into the new place knowing what you’re going to pay. If someone buys a house under Cotty’s bill and pays the lower taxes and then in two years their reassessment catches up with them and suddenly their tax bill jumps to a level they can’t afford, what then? Foreclosure??
Don’t misunderstand what I’m saying. I’m not a big fan of property taxes, but they are a necessary evil today with all of the services local governments are providing. Unless we are going to scrap the public school system and go back to a pre-New Deal model of education, there is really no other way to fund these local government initiatives. A sales tax alone won’t cut it.
If buyers of rental property had to pay a 6% property tax on the point of sale amount, most could not afford to buy and seller’s could not sell. The elderly landlady who needs to go to a retirement home can’t sell her duplex or triplex? A 6% on a property may run $4500 whereas you’re paying 4% at $1200 or homestead of $650 for example. You simply are looking at the issue through a small lens and not considering how much tax investors pay.
Also, investors have paid 6% for 30-40 years and those with no children are tired of carrying the schools. Have you ever thought that investors may tire of this burden and simply get out of the business? Where would people rent since they can’t afford to buy? Think of that scenario. It may not be a problem in Beaufort but in most areas people have to rent.