BITING THE HAND THAT FEEDS US?? YOU TELL ME!!

By
Real Estate Agent with Buyers' Choice Realty

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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Rainer
9,644
Thomas Cunningham
Buyers' Choice Realty - Charleston, SC
Charleston, SC Real Estate
Please fellow Activerainers, give me some feedback on this Hotbutton topic. Taxes and Insurance are always top issues when it come to Real Estate.
Nov 01, 2007 02:08 AM #1
Rainer
32,425
Brandon Causey
Coastal Palmetto Realty LLC - Loris, SC
Realtor, Coastal Palmetto Realty LLC
Glad to see you are paying attention to the issues that we face here in South Carolina.  This is one of those double edged swords, and Thomas, because I don't deal in Condo's as much as you do, I going a different route.  I agree with this concept.  I believe South Carolina and especially Horry County should grow responsively.  We can not if every investor in the US snatches up property to flip and over inflate of market.  Maybe this will curb some of that thinking. 
Nov 01, 2007 02:39 AM #2
Ambassador
529,479
Mirela Monte
Buyers' Choice Realty - North Myrtle Beach, SC
Myrtle Beach Real Estate
No reason to lose a sale.  This is just textbook...  let's see what happens in practice...  Don't make a big deal of it, and your clients won't either..
Nov 19, 2007 11:46 AM #3
Rainmaker
34,438
Stephanie Davis
The Boulevard Company - Charleston, SC
Broker Associate and REALTORĀ®

Thomas, thanks, this helps. I've had several out-of-state sellers call me recently, outraged about their tax bills. I wasn't able to talk intelligently about it to them before; now I have a starting point.

Dec 26, 2008 12:56 AM #4
Rainer
28,950
Spencer Hill
Hill Asset Management - Kingstree, SC
#1 Financial Planner -- South Carolina

We are seeing the same thing happen with farmland owned by out of county residents in Williamsburg county. I have no problem with non-residents paying a lot more property tax. It is just the cost of doing business in investment real estate. Prices will eventually reflect those taxes.

Jan 06, 2009 03:28 PM #5
Rainer
4,999
Cindy Glatkowski
ResortQuest Outer Banks - Corolla, NC
Rental Manager, ResortQuest Outer Banks

Thomas, all our property owners pay the same rate.  But then we have high (12.5%) short term occupancy tax rates, so our owners are not paying, but the visitors are.  I like the idea of lower rates for full time residents.  Anyone who lives in a resort area knows that the cost of living is higher and in general the salaries are lower, so lower taxes would be a help.  In my area (Northern Outer Banks of NC) the younger locals cant afford to buy homes.  The people buying second homes and investments can usually afford to pay a bit extra.  All sellers also pay 1% county tax on sale of a home.

Jan 10, 2009 03:33 AM #6
Rainer
9,644
Thomas Cunningham
Buyers' Choice Realty - Charleston, SC
Charleston, SC Real Estate

Cindy,

  Thank you for your input in your area! I think one of the most useful tools, as Realtors, we can have is the shared knowledge we gather and gain from being part of ActiveRain.

Jan 10, 2009 04:18 AM #7
Rainmaker
917,488
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

YOu are right.  Thanks for letting us know what is happening in SC.  I sell on the NC Coastal area.

Take care,

Ginger Harper

Mar 04, 2009 06:58 AM #8
Rainer
43,585
Bryan Crabtree
Bryan Crabtree, The Real Estate Expert. - Mount Pleasant, SC

Thanks for the post with great information.

Mar 07, 2009 02:56 PM #9
Rainmaker
917,488
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

Hi Thomas,

Thanks for all of your help.  I want to stay connected with you.

Take care my friend.

Ginger

Mar 29, 2009 09:41 AM #10
Rainmaker
917,488
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

Hi Thomas,

Hope you and yours had a wonderful 4th... We did here in Southport..

Come  and see us.

Ginger

Jul 04, 2009 02:57 PM #11
Rainer
1,982
James M. Stewart
Eagle Realty - Little River, SC
GRI, ABR, CRS

As a newby to this blog, etc. it is a revalation to me, the senior (80) to listen to you techies speak a different language. Yet, the tax discussion is a wide open field. I am in Horry County, 10 years, and the "fathers" see fit to confuse us all, basically! Resident, non-resident, investor, first time homeowner, all are a bit bewildered by the laws and how they are changing every session of the Horry county council.

Mr. Cunningham I will continue to attempt to absorb your "tax seminar" with interest. I also feel that we as Realtors cannot get to technical with our customer/client re: taxation. We are NOT tax advisors-we must call on those certified tax advisors to assist the purchaser in understanding Horry County tax laws. I do NOT feel we can sweep taxation advice under the rug. It becomes very "lumpy" and we as Realtors can trip over those lumps!

Jimmy Stewart

Sep 08, 2009 04:16 AM #12
Rainer
104,016
Reuel Grierson
The Millworks of York Co. - York, SC
The Millworks of York Co.

Thomas,  Thanks for your post.  I have been considering this issue myself, and I feel it is time to change hands at the Carolina legistalture.  The tax structure for real estate in SC is rediculous.

Nov 21, 2010 06:41 AM #13
Rainmaker
917,488
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

Hi Thomas...

Happy New Year to YOU.

Hope things are picking up on your coast..

Jan 19, 2011 06:46 AM #14
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Thomas Cunningham

Charleston, SC Real Estate
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