Some developers take ag tax breaks
Untitled
Farmers fear fixing loophole could hurt legitimate ag operations
CHARLESTON, S.C. (AP)--Laws meant to give tax breaks to farmers and timber companies also unintentionally benefit developers, who pass on the tax burden to other property owners.
Owners of land designated for agricultural use receive a huge reduction in their property taxes. The special assessment can cut more than 99 percent of a property's taxable value.
For example, the tax bill on a wooded 5-acre beachfront lot on Kiawah Island, worth an estimated $7 million, was $9.60. The scenario is unusual, but not unique, officials say.
"I just changed one (assessment) today where the people would have paid around $15,000, and instead they paid $92," said Dorchester County Assessor Greg Thacker. "I'm all for it, for true farmers. Those people who abuse it are the problem."
To qualify for the tax break, a parcel must include five acres of trees or 10 acres of crops, in some cases less. County assessors say the broad definition can be easy to meet.
"Our hands are tied as long as that's the use," said Charleston County Assessor Michael Huggins. "My response is: If you want it done differently, change the law."
In his State of the State address last month, Gov. Mark Sanford said it's time to look at the law.
"Back home on the coast I know of a lot of folks whose lands are taxed at agriculture rates, though the land is in fact development land owned by developers - not farmers."
Many large developers with multimillion-dollar tracts of land paid less property tax last year than the average homeowner, according to an analysis by The (Charleston) Post and Courier.
Criticism of the perceived abuse has risen as state lawmakers debate changing the property tax system, because tax breaks for one class of property mean higher taxes for everyone else.
"My whole view is that we can't legitimately look at property tax reform if we don't look at all these things," said Rep. Richard Chalk, R-Hilton Head, who introduced two bills to restrict which land tracts qualify for the tax break. The bills have not been taken up.
Some assessors and the state Forestry Association say large developers aren't the problem, due to a back-taxes requirement. They say abuse occurs when small, valuable lots slip through loopholes in the law.
If land designated as agricultural is developed, the owner is supposed to pay five years of interest-free back taxes on the property's true value.
"If someone is going to buy a large tract to invest, they are typically going to turn it around quickly,' said Berkeley County Assessor Wilson Baggett. "The developer is still going to pay the taxes."
The law, however, allows unconnected, undersized properties to be taxed at agricultural rates if they're part of a "timber management system."
"There's one man who buys up little lots at tax sales and joins them under the same timber management system," said Scottie Warren, who reviews and inspects agricultural assessments for Charleston County.
Advocates for farmers fear the abuse could cause lawmakers to approve new restrictions that hurt farmers, who consider the 30-year-old state program a financial lifeline.
"Without the agricultural exemption there's no way you could pay the property tax with what you can make from farming," said Thomas Legare, an owner of Legare Farms' more than 300 acres by the Stono River on Johns Island. "I'm terrified that well-meaning politicians will do away with the agricultural exemption and drive the farmers out."
Bob Scott, president of the Forestry Association, suggests lawmakers increase the timber lot size to 10 acres and eliminate the loophole.
In Charleston County, the most valuable piece of land in the agriculture program is Boone Hall Farms off U.S. Highway 17. The program reduces the land's taxable value from an estimated $70.5 million to $110,000. The farm is taxed separately from Boone Hall Plantation.
Kiawah Development Partners and its affiliates control the county's second-most valuable collection of land listed for agricultural use - 11 parcels worth more than $65 million but together valued at $201,700.
Date: 3/23/06
Agriculture News from HPJ - Your Ag News Source
Copyright/Privacy
Copyright 1995-2008. High
Plains Publishers, Inc. All rights reserved. Any republishing
of these pages, including electronic reproduction of the editorial archives
or classified advertising, is strictly prohibited. If you have questions or
comments you can reach us at
High Plains Journal
1500 E. Wyatt Earp Blvd., P.O. Box 760, Dodge City, KS 67801
or call 1-800-452-7171. Email:
webmaster@hpj.com
|
|
