Beaufort News

Realtors accelerate push to repeal point-of-sale property assessments

Realtors are again trying to change a state law that says a property's value is reset when it is purchased, arguing the provision costs them sales or leaves new homeowners with higher tax bills compared to similar properties.

"It can be three or four times higher than all their neighbors'," said Karen Ryan, president of the Hilton Head Area Association of Realtors. "And people are walking away from that."

H. 3713, sponsored by Rep. Jim Merrill, R-Berkeley, is in the Ways and Means Committee. A companion bill, S. 647 introduced by Sen. Paul Campbell, R-Goose Creek, and cosponsored by Sen. Tom Davis, R-Beaufort, is in the Senate Finance Committee.

The proposals would roll back point-of-sale value increases between 2007 and 2011 to the properties' 2006 assessments -- though no refunds would be given.

Before the point-of-sale rule was included in Act 388 of 2006, tax values only changed every five years after a countywide reassessment.

Act 388 exempted owner-occupied houses from school operating taxes and included a statewide penny sales tax to recoup lost revenue. It also requires that property be reassessed immediately after it is sold. That draws objections from real estate agents.

For example, if a house was assessed at $100,000 four years ago is sold for $200,000, property taxes on it could double for the buyer.

Andy Klepchick, a Hilton Head real estate agent who serves as legislative chair for S.C. REALTORS, said potential buyers are taken aback by the hikes when they calculate costs of ownership.

"They blush," Klepchick said. "They can't believe it."

Conversely, point-of-sale resets can work in a buyer's favor if property values decline. Beaufort County Assessor Ed Hughes said that, as a whole, properties with a point-of-sale assessment in fiscal year 2011 decreased in value about 2.5 percent.

Adding to the dilemma, if a property doesn't change hands, its assessed value can only increase by up to 15 percent every five years.

The result, Realtors say, are identical houses, next door to each other, charged wildly different taxes.

"There's the inequity of two similar homes side by side, and you've got a vast difference between two tax bills," said Todd McDaniel, past president of the Beaufort County Association of Realtors.

Real estate agents say the law costs them sales and gives South Carolina's neighbors a competitive edge when potential purchasers discover they will pay significantly higher property tax bills after closing.

But schools and cities say they cannot afford to scrap the reassessment requirement. Because of restrictions on property tax increases contained in Act 388, they can't make up the lost revenue.

"We're very concerned about the fiscal impact this could have on our schools," said Scott Price of the S.C. School Boards Association. He said the rollback would result in a one-time reduction in tax revenues of more than $200 million and, thereafter, about $50 million a year.

Similar legislation, which would have capped the point-of-sale assessment at 15 percent, passed the House last year but didn't make it through the Senate.

"This legislation is not the same: It's more clearly explained and it should be more favorably accepted," Klepchick said.

Realtors from across the state are pushing their representatives to support the bill. A group from Beaufort County delivered their message in person last month.

"We had 32 local Realtors who went on the bus and talked to our legislators in Columbia and supported the bill," Ryan said.

Rep. Bill Herbkersman, R-Bluffton, said the proposal could come to the House floor in early April, and he likely will support the bill.

"There's a lot of second homebuyers that would probably refuel that market if there's a more equitable tax basis," Herbkersman said.

Other members of Beaufort County's Statehouse delegation could not be reached Monday.

The (Charleston) Post and Courier and The State contributed to this article.