Economy

Property tax bills haven't caught up with falling home prices

Thomas Stanek got a great deal on a foreclosure last year: He paid $419,000 for a 4,000-square-foot, five-bedroom home that sold for $749,000 just three years earlier.

Normally, property tax values are set at the latest home-sale price — that's how it worked as real estate values soared just a few years ago.

But instead of getting a tax break, Stanek got sticker shock.

His latest tax bill valued the home at $710,000 — 41 percent more than the sales price. That difference forced him to pay $2,000 more in taxes than if the home was valued at his purchase price.

"I was pretty taken aback," he said. "That's a big number. It had nothing to do with what I paid for the house."

Stanek is among a growing number of homeowners across South Carolina getting deals on homes in a depressed real estate market but no deals on their tax bills.

State law requires county assessors to base taxes on a home's "fair market value," not the sales price. This long-standing rule was bolstered by Act 388, which was meant to lower property taxes for many homes statewide.

And in a real estate market where one in five S.C. homes sold early this year was in foreclosure and the average S.C. home sale price has dropped by 9.5 percent since 2008, some homeowners say they are being taxed unfairly because foreclosed homes in their neighborhoods are dragging down their property values.

Several lawmakers and real estate professionals agree it's time to change the law.

"Anywhere in South Carolina that a property has sold in recent years, then the county should base the property value on what the buyer paid for the home. That is the most accurate market indicator," said Rep. Chip Limehouse, R-Charleston. "If the counties are not dropping these values to reflect current market conditions, then we may have to address that legislatively."

Read more of this story at TheState.com

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