Well, my last post didn't get quite the response I had hoped it would so I thought I might skin it down a bit and give you guys just basics.
Now, seeing that "Approx. 67% of our sales-especially in condos---are to the non perm. Resident who are assessed at 6% versus 4% for the perm res; All of this leads to a pretty good deal for the permanent resident (taxed at 4%) but not so good for the commercial, second home, or rental investor (taxed at 6%)"
I'm assuming (which I very much dislike to do) that the above statistics are based on Horry County and not State wide sales. I pulled this information from the public Tax Forum that took place October 18, 2007. I have the complete minutes of this forum on my previous post "If anyone is interested!!".
School millage only comes off 4% owner occupied permanent residence. Not commercial or second homes 6%.
Example:
•A. Pre 2007 Owner Occupied---4%--$200,000 house -- Assessed at $200,000 x 4%=$8,000 x .1760 = $1408 (.1760 is 46.3 county millage plus 129.7 school millage). With no 1% sales tax!
The millage rate for 2008 will be approx. 115.3 mills for school operating and 47.3 mills for the county or .1626 compared to the .1760 for 2007.
Now -Sales price $200,000 x 4%=$8,000 x .0463=$370.40 ( No school millage)- savings of 1037.60 Plus the 1% sales tax
•B. Commercial/second home 6% Pre 2007-Assessed at $200,000 x 6% =$12,000 x .1760=$2,112 With no sales 1% tax
Sold to new investor-(Assuming property was worth $200,000 in 2004 and was now worth $400,000). Sales price $400,000 x 6%=24,000 x .1760=$4,224 Plus the 1% sales tax
Huge disparity of taxes being paid on a like unit by an owner occupied unit (4%) not selling the property, and a non owner occupied (6%) property that was sold and is now at sales price.
Example from above:
Owner Occupied---4% owner doesn't move. Now pays 1% sales tax. Assessed 2004 at $200,000 -at 3% per year house would have been assessed at $218,545 in 2007.
Under new law taxes for perm res. would be: $218,545 x 4% = $8,742 x .0463 (County millage only)=$405 plus 1% sales tax
New Investor Occupied-6%. Same unit sold to investor in 2007 for $400,000.
Under new law taxes for investor would be: $400,000 x 6% = $24,000 x .1760 (County plus school millage)=$4,224 Plus 1% sales tax
Difference of $4,224 minus $405 or $3,819 to the investor - a 1,043% increase
School millage is staying on non owner occupied (6%) commercial & second homes---most of these people have no children in the schools---they are not perm. residents and they, and their tenants, are paying the 1% sales tax while the are in Myrtle Beach..
So, I pose these questions:
Is this, a realistic change to our State taxes?
How does this formula of property taxation compare to others throughout the country?
Any insight anyone would like to share would be greatly appreciated
P.S.
I just recently loss a potential sale of a Condo due to these new tax changes. My clients stated that there would be no Tax advantages for them unless they put a substantial down payment or just purchased for cash outright. Now, most of us know that purchasing a property for cash is not a common practice!
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