Is S.C. rolling the dice on real estate recovery?

If the South Carolina economy were such a board game, the Realtors argue, a recent change in the way properties are assessed for taxes is keeping players - and their cash - on the sidelines just when investments in homes and commercial real estate are most needed to aid in the state's recovery.

Of course, there are other players at the table who have drastically different views, believing the current way of assessing tax, which was approved by the state's voters in a 2006 referendum, is the fairest way to collect taxes and support local government.

Realtors from around the state, including Aiken, will flood the State House Tuesday in support of a Senate measure that would change the rules of the game and spur new business by eliminating the sharp rise in taxes for new buyers.

If Aiken Realtors are any indication, most in that industry are both frustrated by what is called "point of sale" and the impact it has had on their businesses in a time when they are suffering.

They are even more frustrated that few outside their ranks seem to know much or care about the complicated issues of tax reassessment caps, point-of-sale provisions and the stakes involved. Today, the Aiken Standard offers a primer on the issues involved in a series of bite-sized explanations and examples.

15 percent cap on reassessment passes in 2006, point-of-sale provision little noticed

South Carolina voters enthusiastically passed the cap in headier times when real estate values were climbing rapidly. Proponents argued the cap would help safeguard people in homes that had appreciated greatly in value from losing them due to inability to pay higher taxes. With that same vote, the point-of-sale provision was approved, allowing the cap to be removed when a property changes hands and requiring the new owner to pay taxes based on the actual sales price.

Local governments call it growth in the tax base, Realtors label the increases a windfall

With the budget axe swinging at all levels of local and state government, officials said point-of-sale is the only bright spot as it allows a county's overall assessed value to increase despite the 15 percent cap. (There is no tax base growth from the 15 percent increase in values because state law requires the tax tables to be reset in reassessment years and bars an increase in revenues of more than 1 percent overall.) Even in the down market, the cap means many high-end properties around the state are on the tax books at a fraction of their actual value. The intent of the cap in 2006 was to protect current owners from losing their homes even if they doubled or tripled in value. With the Realtor-backed proposal to extend that benefit to new buyers, opponents said people who live in more modest homes will now be essentially paying part of the taxes of those who can afford more luxurious quarters. Remember, roughly two-thirds of properties around the state did not appreciate in value enough for the cap to come into play. That means most in the Palmetto State are paying taxes based on 100 percent of the value of their homes while those with the cap are paying on less -- in some cases 60 percent or less of the value.

Realtors: Fair or not, the increase in taxes from one owner to another is stifling deals

Aiken Board of Realtors Association Executive Kistyne Blake said she understands there are problems with the tax system and that local government needs funding, but she also said that can't be her primary concern. Efforts to reform the whole property tax system are called for, she said during an interview last week, but repairing her industry ¬­- which she believes will spur an economic recovery - must come first.

"Do we want to suppress home sales in South Carolina right now?" Blake asked. "That's really the question."