Still no action on point of sale; frustration mounts
Thursday, February 4th, 2010
Courtesy scbiznews.com
By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published Feb. 4, 2010
Senators debated changes to a controversial property reassessment law on Wednesday and Thursday but again adjourned without taking action.
The sticking point in the so-called point-of-sale debate is the question of whether a proposed property tax break for real estate that changes ownership should apply only to investment properties or to owner-occupied homes as well.
Without a resolution on that point, several senators said, there is no way to move forward.
Over the course of the two days, some senators expressed frustration with the fact that a compromise reached nearly three weeks ago by the two sides at odds on the issue — local government and real estate groups — had fallen apart.
“So we’re starting from scratch?” Sen. Robert Ford, D-Charleston, asked Wednesday as debate began.
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Realtors, governments reach compromise
Senators are considering changing a 2006 law that updates the taxable value of a property to its sales price when it changes hands. Even with the flagging economy, sales prices can be higher than older values on the tax rolls. Realtors say the resulting tax increase can kill a sale or create unequal lease rates for investment properties.
The groups’ failed compromise had included a tax break only for investment properties. A day after it was made, the S.C. Association of Realtors backed away from the deal and called for homes to be included.
After multiple unsuccessful meetings with the two sides, Sen. Thomas Alexander, R-Walhalla, brought back to the floor on Wednesday a version of the point-of-sale legislation that the Senate Finance Committee approved last year.
“If I thought that additional meetings at this point would be fruitful, then I would be meeting with those parties at this time,” Alexander said.
That committee version calls for a 15% limit on increases in property value after a property sells. The proposal applies to owner-occupied homes and investment property. It would last only through 2014.
Were that legislation to pass, municipalities, counties and school districts around the state would lose a collective $44 million in the first year, and more each additional year, according to an estimate by the S.C. Bureau of Economic Analysis.
Local government associations don’t support that version of the legislation. They also don’t support the Realtors Association’s call to include owner-occupied homes in the failed compromise.
Local government officials have said homeowners already have numerous tax advantages over commercial and investment properties. The inclusion of owner-occupied homes would mean more revenue loss for cities, counties and schools than the compromise originally included.
Sen. Larry Martin, R-Pickens, said the governments also stand to lose money without changes in the law.
Martin cited claims from Realtors and others that commercial sales are suffering in cases in which taxes would increase after a transaction. He said the BEA estimate is based on future property sales.
“You don’t lose what you never had,” Martin said.
Martin urged the Senate to take action on the matter. “It’s time to act,” he said. “We’ve let this fester too long.”
But moving any version of legislation forward would take a two-thirds vote of the Senate. Sen. Glenn McConnell, R-Charleston, said neither the committee’s amendment nor the failed compromise version had that much support.
The issue is scheduled to come up when the Senate reconvenes on Tuesday.
Some senators, including Finance Committee Chairman Hugh Leatherman, R-Florence, have suggested sending it back to a committee to work out the details.
“This Senate’s got lots and lots of issues as important as this bill,” said Leatherman.
Sen. Gerald Malloy, D-Darlington, moved to table the matter today, but the Senate voted against that.
Malloy then began what appeared would be a long-winded argument against the legislation, but senators cut him short, voting to adjourn.
“We have this perception that point of sale is going to cause a boom in economic development,” Malloy said before the adjournment. “I submit to you that that perception is not the reality. We are not able to count on that.”