Transfer Tax
The Realtors are at it again. They intend to spend millions to repeal a law that allows county commissions to, with the approval of the voters, impose a 0.4% transfer tax on the sale of property.
The transfer tax will, if adopted, will provide funds to help build new schools and infrastructure for growth. The cost will fall primarily on commercial property and real estate bought for investment purposes. About one third will fall on residential owners.
In spite of the fact that the tax affects commercial property more than residential property, the Realtors and homebuilders are calling the tax a “home tax”. They have spent millions to defeat referenda in 19 counties by convincing people that this 0.4% cost on the sale will make it difficult to sell a home and that it “taxes the American dream”. Now the NC Association of Realtors has made a commitment to add $10 million to an advocacy fund to continue their efforts to defeat the transfer tax.
Fast growing counties will have to find a way to pay for new school construction. The only way that does not require a referendum is an increase to the property tax. This tax will be paid by all property owners, not just those who are selling property.
The bills to repeal the transfer tax option do not repeal the sales tax option. The sales tax is a very regressive tax, hitting a much larger percentage of the income of a low income person than that of a higher income person.
The Realtors and homebuilders must recognize that the growth in Wake County will force the school district to buy property and to build school buildings. These new buildings and land will come at a much higher cost than existing buildings and land. The county commissions and voters should have the option of placing that tax burden on the growth rather than on the backs of all citizens, including those who do not benefit from the growth. This burden will come in the form of higher sales tax or higher property tax–-the real home tax.
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Timing is horrible on this
With foreclosures way up, home sale prices down and the Middle class suffering in general, proposing an additional sales tax on home sales, that would cost average home owners an additional $800 (on a $200k home) to sell their home, just wont fly with voters. Actually, 200k is lower than average. The average home price in NC is around 225k.
It's already being defeated big time locally in numerous counties.
If the tax were only on investment properties and did not include home owners' sales, it may get more support. But, as it stands, it's not.
NCDem Amy on YouTube
Times change
This may not be the time for a transfer tax, but the counties and voters should continue to have the option. There have been, and will in the future be, times when 0.4% represents 1 or 2 month's appreciation on houses. The tax would be paid out of the proceeds from the sale; sellers would have that much in recent appreciation.
Also, we must keep in mind that this is not additional tax. Schools and other infrastructure in fast growing counties must be paid for. If it is not paid for by the transfer tax, it will be paid for by increased property tax.
Everyone has to pay the property tax even when they do not sell their houses and do not have cash proceeds to use.
We should keep the option, even if this year is not the best year to use it.
John Shaw
Cary
Maybe the voters should be presented with a choice
Would it make sense to have people vote on a statement like this:
1. I prefer to pay additional property taxes each year.
2. I prefer to pay 0.4% of the sales price of my house when I sell it.
I know that voting for 2 doesn't mean that property taxes won't rise, but they shouldn't rise as rapidly.
Does this make any sense?
-- ge
Besta é tu se você não viver nesse mundo
http://george.entenman.name
Voters should be shown the choice they are making
Very good idea, zabouti. The voters should be shown that they are not choosing whether or not to increase tax, but simply choosing how the tax is paid: every year by everyone, or only when property is sold.
Cabarrus County Has Found An Alternative to Transfer Tax
Even though it's being challenged in court.
It's the Adequate Public Facilities Ordinance (APFO). Basically, there's a fee for building where schools have reached capacity to offset new building costs.
I wrote about it this week.
It's not perfect; but it's targeted and it's helping to offset the cost of new schools in one of the faster growing counties in NC. We had the Transfer Tax vote and it gave rise to 6 very bad years of fiscal irresponsibility.
Cabarruscheapseats.com: Reasoned Discussion of Cabarrus County, NC News & Politics
Paying for growth
10,000 $12,000.00
20,000 $6,000.00 $6,000.00
30,000 $4,000.00 $4,000.00 $4,000.00
40,000 $3,000.00 $3,000.00 $3,000.00 $3,000.00
Total $25,000.00 $13,000.00 $7,000.00 $3,000.00
I am sorry that the chart above is a little hard to read, but please bear with me. It is a simplistic example, but it makes a good point.
The left hand column is population. The example has the infrastructure costs for a population of 10,000 being $12,000. The real number is irrelevant for this example.
For each additional 10,000 people, you have to spend $12,000 more dollars. Notice that as the population grows, the burden of paying for new infrastructure caused by growth is shared with existing residents.
The last row is a total for what each group has paid for infrastructure over the period. The longer you have been in town, the more you have paid for infrastructure expansion caused by growth.
The first 10,000 people in town not only paid $12,000 for their "share" compared to $3,000 for the last group, they paid all along and over time paid $25,000 compared to $3,000 for the newcomers.
Without growth-targeted fees/taxes, growth does not typically pay for itself. Don't listen to the lies of the Realtors and Homebuilders associations.