|
11.29.05
UNDERSTANDING THE TRANSFER TAX
Often, the impact of the realty transfer tax is not fully understood. The following article should serve to clarify how the realty transfer tax is assessed in the Lehigh Valley, and how proposed increases at the State and Local level will impact the real estate industry and discourage homeownership in Pennsylvania.
A realty transfer tax is a state and local tax assessed on real property when ownership of the property is exchanged between two parties. All types of property, including residential, commercial, and agricultural, are subject to the realty transfer tax. It is assessed only on the sales transaction instead of on an annual basis like the general property tax.
Currently, the State of Pennsylvania charges a 1% real estate transfer tax on a real estate transaction. Municipalities in the Lehigh Valley also charge a 1% realty transfer tax. Therefore, on a real estate transaction in the Lehigh Valley, there is a 2% total realty transfer tax – 1% going to the State, 1% going to the municipality in which the transaction took place. Typically, this 2% is split between the buyer and seller.
Example 1: $100,000 home for sale
State realty transfer tax = 1% ($1,000)
Local realty transfer tax = 1% ($1,000)
Total transfer tax = 2% ($2,000)
The buyer and seller would split the cost of the total transfer tax burden, and would therefore pay $1,000 each in this example.
It is important to realize that the State and municipalities can increase their respective transfer taxes. Currently, the State Legislature is proposing to increase the State realty transfer tax to from 1% to 3%. If that proposal passes, a real estate transaction in the Lehigh Valley would be subject to a 4% total transfer tax (3% state, 1% municipality).
Here is how the previous example would look if the State Legislature passes a statewide realty transfer tax increase:
Example 2: $100,000 home for sale
State realty transfer tax = 3% ($3,000)
Local realty transfer tax = 1% ($1,000)
Total transfer tax = 4% ($4,000)
The buyer and seller in this example would split the cost and would pay $2,000 each. As you can see, the transfer tax doubled.
Now, let’s take this one step further. How much of a burden would it be to a buyer and seller in the City of Allentown if the State approves their increase and on Election Day voters approved a 1% increase too? Let’s take look at the same example:
Example 3: $100,000 home for sale
State realty transfer tax = 3% ($3,000)
Local realty transfer tax = 2% ($2,000)
Total transfer tax = 5% ($5,000)
That’s a big difference. There is no question that an increase of that magnitude will negatively impact the real estate industry, and make it more difficult for consumers to achieve the American Dream of homeownership.
The National Association of REALTORS® and the Pennsylvania Association of REALTORS® have adopted official policy positions against an increase in, or appropriation from, the realty transfer tax. The Lehigh Valley Association of REALTORS®, remaining consistent with their State and National counterparts, has opposed increases in the realty transfer tax on both the Sate and Local levels.
REALTORS® should continue to monitor the actions of the State Legislature, as well as any local proposals to increase the realty transfer tax.
For more information on the realty transfer tax in Pennsylvania, visit the PAR website by clicking here, or go to NAR's website by clicking here. You can also contact LVAR's Government Affairs Director, Ryan Conrad, via e-mail at ryan@lvar.org.
11.21.05 -
STATE LEGISLATURE EXPECTED TO
INCREASE REALTY TRANSFER TAX
PAR Issues Call-To-Action: REALTORS® Assistance Needed
The State Legislature is currently discussing raising the Realty Transfer Tax (RTT), a move that could be very detrimental to the real estate industry. Click here to contact your state legislator.
With the results of the Allentown local transfer tax ballot issue fresh in the minds of LVAR members, REALTORS® are being urged to contact their state legislators to prevent an increase in the statewide RTT. In particular, House Bill 1920 proposes to raise the RTT from 1% to 3%! A 200% increase could be disastrous!
Click here to learn more about this important issue and find out how you can help prevent an increase in the realty transfer tax.
11.10.05 -
ELECTION DAY RESULTS
On January 1st, 2006, residents of Lehigh and Northampton County will see a number of new elected officials filling local government seats across the Lehigh Valley. Some of the more publicized election results are listed below:
Lehigh County Executive: Don Cunningham (D)
Northampton County Executive: John Stoffa (D)
Allentown Mayor: Ed Pawlowski (D)
Bethlehem Mayor: John Callahan (D)
For a comprehensive list of election results click on the following links:
11.9.05 -
VICTORY!
REALTORS® PROTECT THE FUTURE OF HOMEOWNERSHIP IN ALLENTOWN
Allentown voters overwhelmingly vote no transfer tax increase
In what was expected to be a relatively quiet Election Day, REALTORS® took the streets and volunteered at polling places across the city of Allentown. LVAR members were on the front lines, urging voters to vote no to the transfer tax increase.
LVAR's hard work and persistence paid off, as the latest figures being reported by the Lehigh County Department of Voter Registration show the transfer tax ballot question being voted down by a wide margin. According to their web site, voters overwhelmingly voted "no": 71% NO to 29% YES (8,875 to 3,658).
"Our members worked hard for over two months making sure that voters were aware of the negative impacts an increase in the transfer tax would have," said LVAR Board President George Raad. "The results of yesterday's election can absolutely be attributed to their tireless efforts," Raad said.
An increase in the transfer tax would have increased the cost of homeownership for everyone, and make it harder to buy or sell a home in the City of Allentown. It would have been particularly hard on first time homebuyers, who would need more money out of their pocket for closing costs.
"Our strategy was simple: educate voters on the issue," said LVAR Government Affairs Director, Ryan Conrad. "Once voters understood how a transfer tax increase would impact not only themselves, but the future economic stability of Allentown, they acted," Conrad said.
LVAR got their message across through an intensive campaign using various media outlets. One drive through Allentown, and you were likely to see a yard sign, billboard, or a bus board. Voters also found a postcard in their mail and ads in a number of local newspapers.
The message is clear: voters do not want a transfer tax increase. LVAR will be confronting a similar issue in the General Assembly, as a number of legislative proposals seek to increase the statewide transfer tax.
Keep checking back for updates.
11.1.05 -
Election Day is Approaching Fast
With Election Day exactly one week away, LVAR members are working hard to ensure the defeat of the transfer tax increase ballot question in the City of Allentown. Yards signs can be seen in various locations in the City, commercials are running, ads have been printed in newspapers, and mailings are going out - plus much more.
REALTORS® are gearing up for a busy Election Day, which will include "working the polls" and monitoring the results closely. Click on the October 2005 link on the left to view some of the work that LVAR has put into the campaign.
11.1.05 -
Allentown Residents: Don't Forget About the Mayoral Race
As you know, there is a hotly contested Mayoral race in the City of Allentown. LVAR wants to urge all members in Allentown to get out and vote on Election Day. The Mayoral race is expected to be very close, so each and every vote will make a difference.
Learn more about the candidates running for Mayor by viewing their responses from LVAR's candidate interviews. Or, visit their individual websites:
|