Districts here, districts, there, districts everywhere

Did you know that in Greenville County there exists 28 special purpose governmental districts just for fire service?  Those 28 districts operate 80 fire stations, and only three of those fire stations are shared.  In fact, the districts operate three different training facilities.  And 22 of the districts have elected boards.  The remaining six are appointed by the county legislative delegation.

All of the fire districts rely heavily on property tax milage for funding, which prompted Greenville County Council to form a task force to review and develop a new method for adjusting the districts' millages.  The resulting plan, which goes next to several committees of County Council, calls for a millage increases for fire districts to be subject to a referendum.  The proposal also requires that all fire districts produce audited financial statements before requesting millage increases.

Your Home Builders Association of Greenville has taken the position that there are too many special purpose districts in the county and that they are an anachronism of a time when the county legislative delegation governed the county, which ended more than 30 years.  The association's position is that the various special purpose districts should be consolidated by common purpose, like fire or sewer.

NAHB: Property Taxes Remain Constant While Housing Values Decline

Despite claims from local governments to the contrary, an NAHB study has found that even while housing prices have fallen, and continue to fall in some areas, property tax revenue to governments has remained constant.  As a result, property taxes have become an increasing burden on homeowners who have hung onto their homes over the last several years.

Read the entire report at Eye on Housing by clicking here.

If you bought real estate in 2011, you could be eligible for a property tax reduction

Did you buy property in 2011 that is assessed at the 6 percent assessment ratio?  You may be eligible for a property tax discount.

The General Assembly enacted the Point of Sale Bill (H.3713) that among other things provides for a 25 percent reduction in the fair market value of property bought in 2011 and assessed at the 6 percent assessment ratio (commercial, rental, second homes).

In order to receive the reduction, the property owner must apply to the local tax assessor's office by January 30, 2012.

• Greenville County: www.greenvillecounty.org or 864-467-7300
• Pickens County: www.pickensassessor.org or 864-898-5872
• Laurens County: www.laurenscountytaxes.com or 864-984-6546
• Spartanburg County: www.spartanburgcounty.org or 864-487-2552
• Anderson County: www.andersoncountysc.org or 864-260-4028
• Oconee County: www.oconeesc.com or 864-638-4150
• Greenwood County: www.co.greenwood.sc.us or 864-942-8537
• Abbeville County: www.abbevillecountysc.com or 864-366-5312 ext. 102
• Union County: www.countyofunion.org or 864-429-1600 
• Cherokee County: www.cherokeecountysctax.com or 864-487-2543

NAHB study reports on effective property tax rates across the country

South Carolina, and the Upstate, measure up well

Building on previous research examining effective property tax burdens on owner-occupied homes by state and metropolitan areas, NAHB economist Natalia Siniavskaia has published a new paper reporting effective property tax rates by county and census tracts.

The research should be useful for prospective homebuyers and businesses in the housing industry interested in comparing effective property tax payments across narrowly defined geographic areas.

According to the report, the national average property tax rate is $10.35 per $1,000 of property value. The South Carolina average is $5.01. The average for the Greenville MSA is $5.40. The Greenville MSA ranks 340 out of 387 cities measured. South Carolina ranks 46 out of the 50 states. The states with the highest property taxes include Texas, Nebraska, Illinois, and Wisconsin. The states with the lowest property taxes include Louisiana, Alabama, and West Virginia.

An “effective property tax rate” is simply the amount of property tax paid divided by the value of the home, thus giving an apples-to-apples comparison of true tax burden for homes in various locations. The alternative to an effective rate measurement is to compare statutory tax rates, which can be misleading given differences in assessment rules, tax credits, and other complicating factors.

The report presents tables of effective property tax rates for more than 3,100 countiesm, mapped above, and also discusses factors that help explain differences in those rates. It finds that effective property tax rates often appear to be related to household income, the value of homes in the area, and how recently those homes have been sold.

The data reveal wide differences across counties, with median real estate taxes ranging from around $110 per home in several Louisiana parishes to more than $8,000 per home in Hunterdon County, N.J., and in Nassau and Westchester Counties in New York. Similarly, real estate tax rates display a wide range of values, from less than a dollar per $1,000 of value in two Alaska Census areas to around $30 per $1,000 of value in several New York counties.

Drilling the data down to the smaller geographic confines of Census “tracts” — small subdivisions of a county with populations between 2,500 and 8,000 — the data show that even within counties, effective property tax rates can vary significantly. As expected, a large portion of inter-tract differences can be explained by their regional location, with tracts located in the Midwest, Northeast and Texas paying considerably higher property tax rates per $1,000 of value, compared to tracts in the South and West regions.

As the report notes, this is a reflection of a well-known and long-established tradition in which southern states tend to rely less on real estate taxes as a source of government revenue.

As we have noted before, despite dramatic declines in housing values, homeowners continue to pay about the same nominal level of property tax payments, thus leading to higher effective tax rates. This is due to lags in accruate assessments by taxing jurisdiction, but also out of necesssity due to declining sources of state and local tax revenue during the recession.

Governor Haley Signs Point of Sale Bill

One of the last bills to pass the General Assembly this year was the “point of sale” bill (H. 3713). Last month Governor Haley signed the bill into law.

The point of sale legislation is applicable only to non-primary residential properties, which are assessed at a six percent (6 percent) property tax rate. This includes commercial properties, investment properties and second homes. It does not include manufacturing properties assessed at 10.5 percent. It was drafted similar to proposed legislation that was rejected last year.

Under the new law, commercial properties will receive a 25 percent exemption (discount) from the sales value (point of sale) for taxation purposes. The bill also provides for a minimum level of valuation established as the Fair Market Value by the county tax assessor, but does allow for lower valuations if the property sells below assessed value. After the initial setting of the value by the assessor at the point of sale, all properties will continue to be subject to each county’s reassessment program and will be subject to the 15 percent cap on tax increases for each five (5) year reassessment period going forward.

South Carolina House Passes Point of Sale Bill

The South Carolina House on Wednesday approved the "Point of Sale" bill. The vote was close, 64 to 51.

Current law, which was last changed in 2006, requires all homes that are sold to be reassessed immediately. The Point of Sale delays reassessment of existing homes to the next regular reassessment cycle. However, newly constructed homes will still be reassessed when they are sold.

The bill new heads to the Senate for consideration.

Multi-lot Discount May 1 Deadline Approaching

Residential developers and Home Builders who own 10 or more undeveloped lots, who have not signed up for the multi-lot discount, or who have not re-certified their lots for the new year, need to act quickly to be eligible for property tax abatement in the 2011 tax year. Failure to apply or re-apply by May 1 will preclude your participation in the 2011 tax year and result in a significant increase in your property tax bill for the year. To apply or re-apply, contact the Greenville County Tax Assessor's Office.

NAHB Study Sheds Light on Post-Downturn Property Tax Rates

A newly published study from NAHB Economics, titled "Property Tax Rates After the Housing Downturn," provides updated estimates of property taxes and tax rates for U.S. states and metropolitan areas based on data from the government's 2009 American Community Survey (ACS). While the median annual real estate tax payment in the U.S. is $1,917 per home, the study calls attention to the significant variation in tax payments across states.

For example, homeowners in southern states — excepting Texas — and the Mountain Census Division tend to pay lower taxes per home, while homeowners in the Northeast and Pacific states — excepting Hawaii — are likely to pay property taxes exceeding the U.S. median. States with the highest property tax rates include New Jersey, New Hampshire and Texas, where rates exceed $18 per $1,000 of home value. Meanwhile, Louisiana has by far the lowest effective real estate tax rates in the nation, at just $1.79 per $1,000 of property value.

South Carolina ranked 45th in the nation with an effective real estate tax rate of $5.07 per $1,000 of property value. The Greenville area's effective tax rate was $5.40.

Importantly, findings of the report suggest that tax assessments did not keep pace with home price changes during both the recent housing boom and bust years. In other words, homeowners in states with rapidly declining house prices faced property tax bills based on the dated higher-value tax assessments, so they effectively paid higher property tax rates during that time. Meanwhile, homeowners in states with housing appreciation paid property tax bills based on the lagging behind, lower-value assessments, thus registering declining effective tax rates.

The report also concludes that the larger the home price decline in a given market, the greater the tax rate increase has been.

Read the Report at HousingEconomics.com by clicking here.

REMINDER (Builders): Property Tax Relief Deadline is Near

As the result of a law passed in 2009 with the help of the Home Builders Association of South Carolina, Home Builders are eligible for property tax relief on homes they have completed but are not yet sold or occupied. The relief is available for up to five years, but is lost once the home is occupied (for example, if the home is rented) or sold.

January 31, 2011 is a VERY IMPORTANT date. The property tax exemption deadline for recertifying unoccupied homes that got property tax relief in 2010, and for certifying any newly constructed homes, or older homes that have not been enrolled in the program for the 2010 property tax year, is January 31. Those who fail to certify or recertify with their county assessor by January 31 will have no recourse and there will be no exceptions and no tax relief. If you think you might be eligible, contact your county assessor. When in doubt, call your assessor. There are significant savings to be had by participating in this property tax relief program.

Relief also is available for the part of the year in which the home is completed. However, you must apply for relief within 30 days of receiving a certificate of occupancy.

DETAILS OF LAW:

1. Effective date: July 1, 2009
2. Homes Covered by Law: Newly constructed unoccupied detached single-family homes built in 2007 or later.
3. Extent of Tax Relief: Provides property tax relief only for real estate improvement (new home), but builder/developer still pays property tax on the unimproved land.
4. First Eligible Tax Year: 2009 property tax year. No refunds are available for the 2007 and 2008 tax years. Exemption application must have been made by September 30, 2009, to be eligible for relief in the 2009 tax year.
5. Duration of Eligibility: Until the house is sold, occupied, or it has reached the property tax year ending the sixth December 31(five years) from the date a Certificate of Occupancy (CO), if required, was issued, whichever comes first.
6. Recertification: After the initial application, the builder will be required to re-certify homes with Certificate of Occupancy (CO) annually by January 31 every eligible year that the house remains unoccupied.
7. Homes with No CO: Homes without a certificate of occupancy (if required) are not habitable, therefore they can’t be occupied. This means that they can’t be added to the tax rolls until both the CO is issued (if required) and the house is occupied (Administrative Law Court decision).
8. Change in Occupancy: Builders are required to notify the assessor if the house is rented or is occupied by the builder. The house permanently loses its tax exemption with the notification. If the house is sold, the assessor will pick up the change in tax status when property deed is recorded.
9. Legal Reference: Section 12-37-220(B) of state code of law. Bill – H. 3018, Ratification- R88, Act- 76
10. Obtaining Exemption: Homes Receiving CO in 2009 or later, notify assessor within 30 days of receiving a CO, or by January 31, that the house is unoccupied.

If house sale is not pending, it would seem prudent to file the exemption form when the CO is issued just to be safe. Each county has a form to claim the exemption. However, the form may vary slightly from county to county. To protect your legal rights, the application must be notarized.