Update: 10-12-2019: What is a ‘transfer tax’ and other real estate questions answered
This is a renewed topic from my previous 2013 blog post on Transfer Taxes and a more recent article: Opinion The emergence of local real estate transfer taxes
I once searched the reason for Transfer Taxes in the state of Georgia and a former definition I saw on a Georgia government website was a reference that “since it is a privilege to sell property in Georgia, we’re gonna tax you.” Since then, the website has been modified. Also, transfer taxes can be levied at the federal, state and local levels, depending on the type of property being transferred.
In Georgia, the state charges a transfer tax of $1 per $1,000 of sales price (i.e., $300 based on sales price of $300,000) of every residential real estate transactions to one party (either Buyer or Seller – which is negotiable even thought the standard GAR contract states the Buyer will pay the cost, but is still negotiable) of the transaction. Basically, the transfer tax (not to be confused with the Georgia Intangibles tax) is another tax – but instead of just being charged on certain real estate transactions, it’s charged anytime a real property is transferred to another owner.
I’m not sure what the transfer tax feeds in Georgia – it may be that it helps to finance Georgia’s investigations into mortgage fraud or the Department of Banking and Finance who oversees lenders, mortgage brokers, etc.,. Or if it just gets rolled into the General Fund used to pay for other unrelated things…such as golf outings or Christmas parties.
Based on the article mentioned above, local governments are now getting the idea to charge transfer taxes themselves in addition to any state transfer taxes. So far in 2019 about a dozen localities — mostly in high-volume, high-population states — have adopted their own local real estate transfer taxes. Will Atlanta or its metro area local governments start charging new transfer taxes to generate tax revenue? Time will tell.
Here is a list of 2017 Transfer Taxes per state.
Here is the National Conference of State Legislatures NCSL Table of Real Estate Transfer Taxes per state.
The community of St. Helena, California is debating many options to raise revenue for road, sidewalk and park maintenance. One favorable option is a Real Estate Transfer Tax of 1% on the sale of homes. Although I agree that if roads need maintenance, local residents should be willing to pay for that maintenance. But as for the true cost of maintenance and other improvements, it may not be so clear. Please read my post on Sidewalks – do we really need them?
Good luck Frederick, MD, but I think you’re screwed – transfer tax will be implemented and at least the cost is shared equally between Buyer and Seller – in Georgia, it’s charged to the Buyer. Source: http://www.fredericknewspost.com/news/economy_and_business/business_topics/real_estate/article_e7a50470-7b93-5776-9cff-d71079b6129c.html?mode=jqm
Michigan is challenging Fannie Mae and Freddie Mac for millions of $ in unpaid transfer taxes on foreclosures and taking their fight to the US Supreme Court. Source: http://www.freep.com/article/20130520/NEWS03/305200113/Oakland-County-vows-take-fight-real-estate-tranfer-tax-fight-Supreme-Court
Five states do not impose this tax – Mississippi, Missouri, New Mexico, North Dakota, and Wyoming.
Bottom Line: States, as well as federal and local government authorities are constantly looking for ways they can increase tax revenue to fund operations…the question is, will the proceeds collected cover the directly related expenses that authority expends to administer or enforce related real estate activities, or be just another hidden tax?
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