The South Carolina Tax Realignment Commission or TRAC has come out with its recommendations for Tax code changes that they believe would benefit the State’s economic prospects as well as the State’s budgetary processes.

Included in the TRAC report is recommendations for property taxes and shows how the current code negatively effects commercial (rental properties) and second homes for the sake of subsidizing primary home owners. Considering the opportunities to purchase second homes along the Atlantic coast line, the state’s lakes and rivers, and mountain property, the current tax code has a negative impact on this market segment of real estate.

REITS and other institutional investors have also found that the higher tax burden is nearly impossible to pass on to tenants through increased rental rates and therefore are not an active participant in the real estate market. The tax burden for small time investors is also an increasing problem.

Recommendations from TRAC are that the State’s General Assembly address the inequities.

Governor Nikki Haley of SC has stated that she wants to make the state competitive and small business friendly. Lets hope that the tax code will be part of that plan.