I have tried to be objective in my writings and present facts, so you can make informed judgments on your real estate decisions.
This article may be somewhat prejudiced because I am a homeowner, just like the majority of you who read my column.
If you rent, this too will apply to you, if you plan to be a property owner in the future. On the November ballot is proposition 100, nicknamed, protect our homes.
The measure aims to amend the Arizona constitution and permanently prevent real estate transfer taxes in Arizona.
What is a real estate transfer tax? It is a tax imposed by state or local governments that is collected when you sell or transfer your home or property. It is the equivalent to sales tax on your home. So, when you buy or sell a property, the government would collect a tax on that transaction.
By voting yes for proposition 100, you:
• Avoid double taxation. Governments already collect property taxes based on the property’s value.
• Prevent loss of equity. The tax would be assessed against the total value, including the amount you owe on your mortgage. The overall equity earned by the seller would be decreased.
• Prevent damage to the real estate market. Can you imagine having this tax in place in during this difficult housing market?
• Prevent punishment of homeowners. People who move from one house to another should not be punished by a tax while others who choose not to move, would not be taxed.
• Prevent an unfair impact on low-income families. A transfer tax would impose a higher tax burden on low-income households that typically spend a larger percentage of their income on their homes.
It is important to note that in my previous research on real estate transfer taxes, once the door is opened, the tax rates tend to rise.
For example, in New York City, a home purchased today for $331,500 with a 20 percent down mortgage, would have a total transfer tax of almost $10,000 paid by the either the buyer or seller depending on the negotiation.
You are urged to study this proposition carefully and remember, a yes vote will permanently remove this threat of unfair taxation in Arizona and protect your home equity.
Ray Pugel is a designated broker for Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.