Despite a tremendous battle waged by the real estate industry including the North Carolina Association of REALTORS (see above!), the North Carolina legislature made an historic move and passed a bill last week that included giving counties authority to to ask voters to approve referendums that would raise their real estate transfer taxes three-fold.
So, what does this actually mean and how will this impact our local Lake Norman real estate market short term and long term?
- A transfer tax, sometimes called an excise tax or deed stamp, is a fee (currently .2% of the purchase price of a property) commonly charged to the seller every time there is a transfer of ownership of real estate
- This new legislation will allow individual counties to increase this closing fee by .4% thereby increasing the dollar fee to 3-times the current rate. On a $200,000 dollar sale the fee would jump from $400 to $1200. Under this new option, counties can keep the additional dollars from the tax increase to help pay for new schools, jails and other infrastructure improvements. The debate was centered around this option which focuses on new income from home sales VS an increase in overall property or sales taxes. To read more about this debate: www.charlotte.com.
What is the short-term impact on Lake Norman Real Estate?
- The Iredell County commissioners, according to The Charlotte Observer, say they are unlikely to seek this new revenue option at this time.
- Mecklenburg County commissioners have said that they will not seek it this year but they are considering it for the future.
So, while it looks like we will not have real estate transfer tax increases in the near future, this may change at any time. The good news is that an increase in this tax will require voter approval so we will all be able to weigh in on the pros and cons before any increases will be made. It will be an interesting and difficult debate as we will be asked to consider the impact to affordable housing VS the ability to shift the costs for new schools etc. from longtime property owners to those buying and selling real estate.
What is your opinion? Please add your comments!