Help Homeowners - Not Towns and Allow Conveyance Tax Increase to Sunset
May 29th, 2008 categories: Central Connecticut News & Information
Home sellers in Connecticut pay a conveyance tax when they sell. The median home in CT sells for about $250,000 and the real estate conveyance tax on the median home would be about $2000, more if you live in one of the 18 towns that can charge you an extra .25% or an extra $500.
The tax was raised a few years ago, temporarily, to help solve a budget shortfall but keeps getting renewed. Municipalities are desperate not to lose this tax because it’s easy money and most home sellers forget about it until the closing table.
The increase in the tax is supposed to sunset, rolling back to its original amount - saving future home sellers around $400 based on the median sales price of $250,000. It’s not a lot of money but the principle is simple:
If the tax was supposed to be temporary, legislators have an obligation to roll it back.
And with all the talk about rescuing homeowners these days from subprime mortgages, what about rescuing homeowners who are responsible enough to sell their homes before the bank forecloses on them but have to walk away owing the bank and the government money?
From whom do they need rescuing?
In Tuesday’s Hartford Courant, a letter to the editor appeared from the Exective Directors of the CT Conference of Municipalities and the Capitol Region Council of Governments - two groups that lobby for town and municipal governments. Here’s what they had to say:
“…the special-interest real estate lobby which seeks to portray itself as the homeowner’s friend by lobbying to deprive municipalities of up to $40 million in needed revenue next year.
That’s right - the same for-profit Realtors who take up to a whopping 7 percent cut of any home sale want to slice $40 million in non-property-tax revenue by reducing the municipal share of the conveyance tax. That means a direct shift of that amount onto the back of the property tax - Connecticut’s most overused and income-insensitive tax.”
Well, I was pretty mad so I wrote a letter to the editor and it appears in the Hartford Courant today, May 29. Here is most of my letter:
‘Although Mr. Finley and Mr. Wray tried to dismiss Realtors like me who disagree with them as part of the “special-interest real estate lobby” and “the same for-profit Realtors who take up to a whopping 7 percent cut of a home sale,” Realtors are leading the fight to protect our clients’ home equity.
Note: Realtors are often the only professionals involved in a real estate transaction willing to negotiate their fees, which, for the sake of accuracy, are not typically 7 percent of the sales price.
However, I would like to present the only opinion that really matters - that of the homeowner and, in particular, the homeowner selling today.
In today’s market, more and more homeowners owe more on their homes than the homes are worth. More often than not, these are homeowners in areas with a high rate of foreclosure, a declining median sales price and a shortage of qualified buyers. These homeowners face some tough options: come to the closing table with money, negotiate a short sale, which affects their credit, or allow the bank to foreclose, which affects their credit even more.
What do I say to homeowners who want to do the right thing and pay what they owe on their mortgage? Should I tell them that the Connecticut Conference of Municipalities, a powerful special-interest lobby representing the expanding budgets of towns and cities in Connecticut, has been fighting tooth and nail to keep the increased real estate conveyance tax, which robs them, homeowners in trouble, of their equity, possibly forcing them to pay a tax when they walk away with no money?
The real estate conveyance tax should be rolled back to its original amount - not because it will help Realtors but because it will help homeowners.’
[…] Be sure to read Jessica Beganski’s comment below and her blog post about what is happening in Connecticut with regard to an existing real estate tax. Once these taxes get set folks, they are easy to raise and difficult to remove. Thanks for […]
I’m a Realtor in Arizona. Our state is talking about implementing a real estate transfer tax. It seems that homeowners are an easy mark. Many homeowners associations here started charging an “impact fee” when people sell their property. It’s an easy way to build up the HOA coffer. It’s easy to raise property tax when a municipality needs money. It’s also apparently easy to “temporarily” raise the real estate conveyance tax that you have in Connecticut.
We Realtors are supporting an initiative to prohibit real estate transfer tax in Arizona. We are also doing it to help homeowners. The comment in your local newspaper by the lobbyist for municipal governments about “for profit Realtors” was way off base. I’ve been a Realtor for 35 years. You are correct, Realtors have fought to protect the homeowner and promote the American dream of home ownership. As far as our commissions, we work to earn the money we receive from the sale of a house. We aren’t just “taking” a fee like a real estate transfer tax does.
FRANK HANSON,ABR,CRS,GRI
http://www.phoenix-relocation.com
[…] without going through bankruptcy or foreclosure, a real estate agent in Connecticut grants some insight: Home sellers in Connecticut pay a conveyance tax when they sell. The median home in CT sells for […]