"Home sellers in Northern Virginia will face an added expense next month: a fivefold increase in the grantor's tax.
The grantor's tax is a Virginia-wide levy on home sellers at closing, although builders generally write their contracts to make the tax the buyer's responsibility.
Currently the tax is 10 cents per $100 of either the property's assessed value or its selling price, usually the latter. That means that on a $500,000 house, the tax has been a relatively modest $500.
On Jan. 1, however, the grantor's tax is slated to increase to 50 cents per $100 -- but only in Northern Virginia. On a $500,000 home, that will be $2,500."
Monday, December 31, 2007
Going Up -- Grantor's Taxes in N.Va.
Posted by Harriet at 9:59 AM
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27 comments:
Oh, for Pete's sake! Does the Commonwealth really think that a policy like this makes sense in a collapsing Real Estate market?
Yeah, Richmond isn't directly to blame for this, considering the NVTA is what "generated" the new "revenue," but if it weren't for the unnecessary creation of the new Taxing Authorities (see: "needless commission"), I don't see how this increase would've gone through...
Regards,
Brian
This is nuts.
Everyone shout out, "Let them eat cake!!!"
Here is a great story about rising down-payment requirements.
http://tinyurl.com/yqluzt
It is still surprising to me that someone buying a half million dollar house would have trouble coming up $50k.
If you can't even save up a 10% down-payment then maybe you need to rethink your decision.
KH- the money has to come from somewhere. It is either more taxes or less spending.
What exactly is "Northern Virginia" then for tax purposes and why are they doing this just for part of the state?
Thanks.
Leroy,
Great comment! I turn red everytime I hear the gov't trying to get rid of the measely 3% downpayment required for some gov't loans.
If people were required to pay 10% they'd have to save, realize how much money 10% is in today's inflated market and reconsider their purchase.
I personally hate the gov't programs which distort the housing market and socialize costs.
I want personal responsiblity (Im a renter saving up my downpayment)
"the money has to come from somewhere. It is either more taxes or less spending."
Yes, it has to come from somewhere but it's wrong to whack one segment with a 5 fold increase. The tax was already a percentage. It's not as if they had a long standing $500 filing fee that needed to be raised to make up for inflation.
Those jerks are counting on people thinking, "well, I have my place so I don't care," or "I'll keep renting, so I don't care."
Wrong is wrong.
I'd go with a gas tax of 25¢/gallon across the region, something that hits consumption. Everyone pays a little and everyone benefits to a degree.
25¢/gallon or even 50¢, which is pretty stiff in my book but I'd rather the money go for our roads than roads in Abu Dhabi.
They also mention a tax on auto repairs. That one hits people with older cars more than those who buy new every three. In that sense it's regressive.
Taxation- the art of making someone else pay for something you want.
Pretty much every tax is designed to favor someone, that is just how the game is played.
Stealth- "If people were required to pay 10% they'd have to save, realize how much money 10% is in today's inflated market and reconsider their purchase."
I agree completely. I am very glad to see down payment requirements rising again. That seems to be the only thing that can make potential buyers realise that the price of their new house is real money.
If $50k sounds like a ton of money to you... what does $500,000.00 sound like? I think for a lot of people their brain just disengages when they see all the zeros.
One of the most interesting things about this whole bubble to me is just how quickly people came to believe that $500k is "normal," when only a few years before that would have been considered a very expensive house.
Kh...I'd love to see fiscal responsibility in government and less spending.
Very few politicians these days talk about cutting services, or making them more efficient and as a result letting people keep more of their earned income.
Its sad how many in this country believe in big government, and that if the government owes you a service that it doesnt come out of your pocket. This country would be much more prosperous if we had a limited government and more personal responsibility. We'd also have a lot more freedom as well. With government services comes government control over various aspects of our lives.
Did anyone see the story of Maryland increasing their cigarette tax to $2 a pack?
Virginia's tax is only $0.30 a pack- They should up that to be comparable with Maryland.
"Virginia's tax is only $0.30 a pack- They should up that to be comparable with Maryland."
Hey, don't give them ideas. I don't smoke but I know it's wrong to tax one segment so heavily.
Back to houses, this tax increase is just plain wrong.
"Very few politicians these days talk about cutting services, or making them more efficient and as a result letting people keep more of their earned income."
The nuttiest part has been the sobbing cries that "real estate assessments might not increase and we won't get our fair share to spend."
What the HEIL is that all about? My tax payments have shot up in the last 6 years.
They've got plenty of money.
This is one of those things you read and just shake one's head. Thanks for posting Harriet. But what are they thinking? Home sales are down and not supporting today's listing prices so let's slow them further? Nothing let government help to speed up the melt down.
KH said:
25¢/gallon or even 50¢, which is pretty stiff in my book but I'd rather the money go for our roads than roads in Abu Dhabi.
But that would be strategic thinking. Getting J6P off the road onto rail (or bus) isn't what the politicians are willing to back... today.
Got popcorn?
Neil
You can't really blame them for targetting RE the way they did... after seeing how the market behaved the last few years they probably just assumed that nobody paid any attention to how much money they were spending anyways so they wouldn't notice a little more.
If people don't like this sort of thing then they need to actually go out and vote in their local elections. One of the biggest problems with the media consolidation that has taken place over the last few decades is the near-death of quality local reporting.
Everything is now geared towards a national audience and the average joe seems to expect the federal government to interact with them daily on main street.
If people realised that the sheriff and judges you elect play a far bigger role in your day to day life than the president, we would see people take more of an interest in local politics. Instead... voters turn out for the national elections don't don't even know the names of their local candidates.
Discount real estate brokers are going to start looking better and better to home sellers.
I do hope this one is repealed. I think the issue will raise more flack when sellers (and buyers by default) start to notice next year.
We bought a new vehicle this year and were a bit unprepared for the ensuing tax hike. We'd been spoiled by driving an older one and paying less.
If you folks interested in housing, transportation and taxation in Virginia are interested, Bacon's Rebellion is something I check in on from time to time. Today one of the articles is this:
"The Coming Assessment Wars
For a couple of years now, I've been predicting the following course of events: (1) a collapse of the housing bubble, followed by (2) a collapse of real estate assessments, (3) higher tax rates to make up the revenue loss, and (4) a revolt of the taxpayers against city councils and boards of supervisors."
kh said
Those jerks are counting on people thinking, "well, I have my place so I don't care," or "I'll keep renting, so I don't care."
exactly. and then the articles i've read, also throw in, 'this brings the northern va tax inline with dc and md', or something of that sort. so that makes it right? what is this money going toward? and it's not as if some other tax wasnt already higher than dc or md to offset it and now this one is added...wow.
why not just say, hey property taxes are going up, this brings them more in line with texas. but texas' other taxes are much less.
and harriett...
"and (4) a revolt of the taxpayers against city councils and boards of supervisors." yawn, i'd love to see any kind of 'revolt' so i hope everything is taxed higher
With all due respect for many of the fine comments, I think we're missing the big picture. Fairfax County has 14% of the state's population, yet provides 27% of the state' budget. The stats for Northern Virginia are 47%/75%. Too many people in Northern Virginia continue to elect right wing nut jobs who obsess over our sex lives instead of the contents of our pocketbooks.
I'm not mentioning any names but their initials are David Albo, Ken Cuccinelli, Scott Lingemfelter (spelling??) and Bob Marshall. All of these guys were re-elected last year. They do NOT care about taxes, they care about sex, abortion, and gay people.
I suggest that before the next election, you take a hard look at your candidates. go the the General Assembly's website and look at the legislation that these guys sponsor and co-sponsor - that will tell you how they spend their Richmond vacation.
Northern Virginia has enough seats that if we work with Hampton Roads, we can get more of our dollars back here to work for us. And we wouldn't have these outrageous taxes and fees levied upon us. People, don't re-elect these guys! Do some research and vote your pocketbooks.
NVTA = Taxation without representation.
FYI....a $0.05 increase in the Commonwealth's gas tax would all but make the NVTA and other "authorities" all but obsolete.
It's a sad day when every politician that goes to Richmond knows this.
What our legislators lack is not knowledge or data on the problems with the budget, transportation, etc. What they lack is the political courage to do the right thing.
We still have a transportation and taxation system predicated on cheap gas and an agrarian economy. Those days are GONE. Our society is moving in one direction and our public policy is going in another.
Bite the bullet and raise the gas tax!!
"FYI....a $0.05 increase in the Commonwealth's gas tax would all but make the NVTA and other "authorities" all but obsolete."
True? Then lets add a 5% tax which is 15¢ at today's prices on top of the current tax.
That way all scenarios are covered.
And we can fire the NVTA and the others who sit around and "appreciate the problem". We don't need them.
KH -
They (The Senate of Virginia) tried to add a 5% sales tax on gas the last year and the Virginia House of Delegates would not accept it.
Read it here - http://tinyurl.com/2qf5ol
Many of the "Wing Nuts" that Moria mentioned can be found in the Virginia House of Delegates. The Senate had a few notable examples (still does)but most are in the HOD.
To all of the NEO CONS in the VA HOD....So much for small government, right?
The best that they could come up with is a system of taxation w/o representation.......Ronald Regan would roll in his grave if he were alive.
Finally, the gas tax is a user fee. The more you drive, the more you use the roads, the more gas you buy. It's just that simple.
Plus, out-of-state drivers pay as well.
Happy New Year! I will check back tomorrow around noon when I get up!
Why do I suspect a certain poster here would blame a certain political party for anything that goes "wrong?"
...
Just a hunch...
"Finally, the gas tax is a user fee. The more you drive, the more you use the roads, the more gas you buy. It's just that simple.
Plus, out-of-state drivers pay as well."
You mean, like drivers going from New York to Florida who clog up the Mixing Bowl and I 95?
Makes too much sense, I guess.
gold h2o said:
"Plus, out-of-state drivers pay as well."
Your relatively low gas taxes might actually be bringing in more total revenue to Virginia than if they were increased. Why? Ever noticed how few gas stations there are in DC? I can tell you that though I live in the District, I only buy my gas there if I am in a pinch. Otherwise I always wait until I am across the river ... and in a lower gas tax jurisdiction. I'd suspect that many (if not most) of the hundreds of thousands of commuters from MD to VA do the same. It would be interesting to know how much of Va.'s gas tax revenue comes from DCers and MDers.
There is an economic case to be made for keeping gas prices in general as cheap as possible. In order to conduct business ... and thus grow the economy ... people need to be able to get around. The cheaper they can get around, the more they will circulate to all corners of the commonwealth selling their goods, providing services, and building homes and cities.
In already well established places such as Alexandria and Arlington, a mass transit system coupled with taxis and walkable downtowns, people don't require a transportation "subsidy" from the state ... They're already receiving transportation subsidies in the way of mass transit subsidies (buses, metro) and through local governments building and maintaining sidewalks, lighting, and other things that allow people to get around.
In the not yet fully developed areas, there's no doubt that the car is king. Building mass transit systems to allow people to get around in places such as say Charlottesville or Roanoke or even Centerville would be inefficient and prohibitively expensive. Yet, it is in the commonwealth's interest to want to see all these places grow. And since the commonwealth - and local governments - are already "subsidizing" the transportation needs of the urban areas ... helping them maintain the ability "to do business", what is wrong with the commonwealth's doing the same for the non-urban areas in the most cost efficient means possible ... i.e., subsidizing the true costs of getting around by car. The alternative, building the same mass transit systems and urban infrastructure enjoyed by urban areas, would be far costlier for everyone.
"Your relatively low gas taxes might actually be bringing in more total revenue to Virginia than if they were increased."
If that were the case then there would be no need for something like the NVTA.
"Why do I suspect a certain poster here would blame a certain political party for anything that goes "wrong?"
All I can say is that the Virginia House of Delegates is the most out-of-touch governing body in the Western Hemisphere.
Let me tell you what is wrong with our entire society-both individuals and our government:
Everyone wants to live beyond their means.
The local governments have been doing very well the last number of years due to the booming real estate market--between the real estate tranfer taxes and increased assessments, the counties have been awash in lots of cash. And so instead of perhaps paying down some debt (knowing that a boom like this will have an end) or holding money in reserves, they have made their governments BIGGER, whether with new "social programs" or the creation of more and more jobs. The problem is that unlike a regular private business who has to lay off people or pare down when revenue goes down, the government forces everyone to pay more taxes (or creates new taxes) to maintain the machine they have created. A private business does not have that luxury. The government should be run like a business.
And the same goes for private individuals. They overspent on many things (especially houses) and now expect someone to bail them out instead of cutting back or moving to a more affordable home.
"There is an economic case to be made for keeping gas prices in general as cheap as possible."
Gas is an issue but 5%, 10%, or 15% on gas is not.
According to Goldie, 5¢/gallon will cover transportation expenses. If 5¢ is adequate, 5% is even better.
The bigger issue is congestion, inadequate roads, bridges, parking, sidewalks, access to mass transit.
15¢/gallon is less than a penny a mile. Perhaps that will improve the infrastructure.
There are some very fat rich people working over at the Government Center.
Secretaries making 75k, mid level management making 150k.
When you ask where you tax money goes, well thats where...
I have been selling real estate in Northern Virginia since 1965. I have seen many up and downs in real estate market, but none this steep.
And now they want to raise Grantor's tax too. Now isn't this the worst time to do that with housing market still falling. Some homes here have dropped 2/3 of the price they sold for in last two years.
Townhouse in on market for $99,900. it sold for nearly $300. a year ago?
A cape cod is for sale for $119,000. which sold in 2005 for $335,000.
Even rentals prices are falling some what?
Star Homes Realty 703 335-5151
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