It's very encouraging to find out that government-initiated reforms accomplish what they intend to do. South Carolina commercial real estate developers in Charleston, and across the state, have noticed the positive impact of recent changes to property tax laws. Many developers have noted that many of the problems that came up during transactions have largely been impacted by the new tax laws.
Last year, the state approved changes to how taxes are assessed at the point of sale for commercial properties and second homes. Prior to the changes, existing tax laws caused significant property tax increases as commercial properties with appreciating values were sold. In some cases, when property tax values climbed, taxes could increase by as much as 25 percent. Oftentimes, tax hikes of that size would disrupt -- even end -- ongoing commercial property transactions. Now, such tax jumps do not occur unless property values have risen by more than 33 percent.
One particular South Carolina developer has noted that these changes have brought several million dollars worth of investments into local communities. In fact, he noted one negotiation during which an investor was hesitant to provide funding largely due to point of sale issues. When the laws changed, many of the investor's concerns were erased. Overall, the developer noted that these changes help to grow the state's economy and provide jobs for those without work.
During major commercial property transactions, there are a number of complications that can arise. Fortunately, a major sticking point in property deals, point of sale, has been addressed by state lawmakers. As a result, Charleston and other South Carolina communities are seeing some of the benefits. On the other hand, some complications that legislation cannot always address, such as title insurance, zoning or access issues, can stall deals that stand to benefit communities. In those cases, the right kind of knowledge and know-how can produce favorable results for those looking to purchase or develop commercial property.
Source: The Post and Courier, "Change to property tax law stimulates some real estate deals," David Slade, March 25, 2012
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