Do you think you should have to pay more taxes to own a home?
Every few years, the Arizona legislature proposes an additional tax on the sale of real estate. The tax could be levied on the buyer or seller. Fortunately for the Arizona homeowner or homebuyer, due to lobbying efforts, it has failed to pass.
The Arizona Association of Realtors has launched an initiative campaign to assure that homeowners in our state, by the adoption of a constitutional amendment, will never have this regressive tax placed upon them.
Other tax hungry states have instituted this burden on citizens. The tax can be three-tiered to include an assessment by the state, the county and local municipality. New York has had this tax for some time. New York charges $2 for every $500 of value, in addition to New York City's charge of one percent of the sales price. For example, on the sale of a $331,500 home, (average price of homes sold in 2007 in the Rim Country) the cost of the American Dream would be an additional $4,641 if such a tax was instituted in Arizona similar to New York's. This cost is usually borne by the seller of the property. In addition to a real estate transfer tax, some states have enacted a mortgage transfer tax. Again, if you were buying the same home valued at $313,500 and financing the purchase with a 20-percent down payment, your mortgage would be approximately $250,000. The combined tax imposed by the state and city of New York would be $2.05 per $100 of value. This would be $5,125 a homeowner would pay to government agencies for the privilege of taking out a loan on your home.
Bottom line, the combined tax payable for a $331,500 home with a $250,000 mortgage would be almost $10,000. This is paid regardless if there is a profit or loss on the sale of the home.
Transfer taxes in other states started out small and, like most taxes, grew over time and never went away.
The National Association of Realtors issued a study in 2003 on the impact of the real estate transfer tax. To view this study and become more informed, visit http:// www.aaronline.com/documents/.pdf.