Call to Action!!! - Help Repeal the "Point of Sale" Real Estate Tax in South Carolina

Today I received a Call to Action e-mail that was sent to all Realtors around the state.  I have posted this e-mail below because it not only affect Realtors, but virtually every single person in the Palmetto State.  If you own, plan to buy, or plan to sell property in the state of South Carolina this affects you in a dramatic way.  If you don't know what the Point of Sale real estate tax is, you should.  Below are some facts taken directly for the SC Realtors website.  Keep reading to learn more.

From the SC Realtors Website on "Point of Sale":

In 2006, the General Assembly enacted property tax reform that provided for point of sale property tax assessment.  Regrettably, this has created serious inequities in the real estate market.   

Point of sale assessment is driving real estate investors out of our state while businesses considering locating in South Carolina are choosing our neighboring states instead.  From industrial properties in the upstate to commercial facilities in the midlands to investment residential property along the coast, every market has suffered.  

South Carolina REALTORS® are supporting H.3272 that addresses the inequities caused by point-of-sale assessment. 

H.3272 extends the 15% reassessment cap applied to all properties at countywide resassement to assessable transfers of interest (ATIs) and uses that value as the baseline for the next countywide reassessment cycle.  It has already passed the House and received unanimous approval in the Senate Finance Committee on Tuesday, May 5, 2009.

Important Points to Note:

• Prior to 2006, counties in SC assessed property every five years, though each of the forty-six counties had a different assessment method.  Some counties assessed very close to market value, while others assessed at just fifty percent of market value. 
• In the residential market, neighboring properties now have gross differences in property tax obligations, because one property sold post 2006 property tax reform and the other has not changed hands.  This inequity will only worsen over time, as longtime residents now have a disincentive to move.
• In the commercial market, when a property changes hands; the additional property tax burden must be bourn by the tenants.  If the leases on that property do not allow for the increase, then the actual value of the property decreases as the commercial facilities net operating income decreases. 
• Further, a commercial facility that has not changed hands that is located near another that has been sold recently has an unfair and inequitable market advantage – the ability to offer lower lease costs with wider income margins.  This produces another disincentive to transfer. 

My common man's breakdown on Point of Sale:

If Joe and Tom lived next door to each other, and had purchased identical homes, shouldn't their taxes be the same?  Well, if Joe bought 10 years ago at $200,000 and Tom bought last year at $400,000, Tom pays twice the taxes on an identical home.  Identical homes should be taxed the same and inequity is only part of the problem.

Point of Sale is killing an already devastated real estate market.  If you are a buyer, why in the world would you pay taxes that are up to 8 times what you would pay in Georgia or North Carolina?  Exactly, you wouldn't.  You would simple move to one of those states.  If you are a seller wondering why your home or lot will not sell, consider the possibility that the "Point of Sale" tax is forcing your potential buyers into neighboring states to buy.  Sadly, scenarios like that are happening every day. 

If the above was not bad enough, mull over the tens of millions of dollars in lost real estate transaction revenue.  What's the ironic part?  That's the kicker.  Many of the same government geniuses who passed the Point of Sale tax, now find the communities they represent, running out of money due to lack of real estate transaction tax revenue.  If it wasn't ridiculous, it would be a comical.

Do understand that Point of Sale is not the only cause for the economic hardships facing our state.  While just one part of the economy, real estate accounts for an enormous portion of our economic system.  Real estate helped us get this predicamete, and a repeal of the Point of Sale tax could allow real estate to lead us back to prosperity. 

Interested in taking action?  Click any of the links in the below e-mail to contact your state representative or to share with a friend.

Point of Sale on Senate Floor Dear Andrew Covington, We are making progress on point of sale in the Senate, and with just a few weeks remaining in the legislative session, I need your help.  Please contact your Senator to support H.3272, legislation addressing point of sale assessment.  The House has already passed this important bill and the Senate Finance Committee approved it on Tuesday, May 5th.  It is now on the Senate floor awaiting consideration.  Please contact your Senator in support! No one knows better than you that the 2006 changes to the property tax structure in South Carolina have had a negative effect on economic development in South Carolina, and Senators need to hear from the real estate community.  This is the single most important economic stimulus that the South Carolina General Assembly could provide for our state. Please contact your Senator immediately and urge them to support H.3272.  Time is of the essence.  We need to keep our momentum moving forward so that point of sale is addressed this year.  Sincerely, Cashion Drolet VP of Government Affairs SC REALTORS Send a letter to the following decision maker(s): Your State Senator (if you live in South Carolina) Below is the sample letter: Subject: Approve Point of Sale Legislation! Dear [insert your State Senetor here], On behalf of the citizens of South Carolina, please support H.3272 and ensure that point of sale assessment is addressed this year. My greatest investment, my home, and the economic recovery of this great state depend on it. Point of sale property tax assessment is having a negative effect on the real estate market and economic development in South Carolina. In an already ailing economy, point of sale assessment is further driving real estate investors out of our state, while businesses considering locating in South Carolina are choosing our neighboring states instead. Correcting the inequities caused by point of sale assessment is the most important economic stimulus that the General Assembly could provide for our state. As a Realtor and your constituent, I respectfully urge you to see to it that H.3272 is considered by the Senate as soon as possible and vote for this important bill. Sincerely, South Carolina Property Owner Take Action! Instructions: Click here to take action on this issue Tell-A-Friend: Visit the web address below to tell your friends about this.  Tell-a-Friend! What's At Stake: The opportunity to address property tax assessment issues in 2009;  All future real estate transactions in SC; Economic delveopment; and Your livelihood! Campaign Expiration Date: May 21, 2009