1% Realty Transfer Tax Increase (Pittsburgh, Allentown: 2014, how much, house)

[jea6321]

as much as I hate to see any more taxes or closing costs, realistically I dont see it having an affect on sales. Its standard to split the transfer tax, so right now on 100k house you pay $2000 or 2.0% of purchase price. that would go to $2500 or 2.5%. I dont see people deciding to NOT buy based on a .5% increase. Especially when a lot of people negotiate seller assist that covers most or all of the closing costs.

I agree with lprmesia on there are better ways to raise more revenue and even lower the transfer tax. Refi tax is the low hanging fruit that is not being picked.

[mbw5100]

Originally Posted by Copanut

Boy, just when I was thinking of getting out of the 'burbs and buy a house on the Northside to walk to Bucco games, this comes along. Couple that with Nutting dumping this season, AGAIN, I think I'll stay in the Great White North.


That tax is ridiculous. All the trends show people moving back into the City, so this is what the powers that be come up with?

Just saying: If you think it'd be a cool place to live now, you'll probably think it will be a cool place to live in 10 years. And, in ten years, you'll have high closing costs on top of what will probably be higher priced houses--and, really, they are SO darn cheap right now.

[WhoIsStanwix?]

Originally Posted by jea6321

as much as I hate to see any more taxes or closing costs, realistically I dont see it having an affect on sales. Its standard to split the transfer tax, so right now on 100k house you pay $2000 or 2.0% of purchase price. that would go to $2500 or 2.5%. I dont see people deciding to NOT buy based on a .5% increase. Especially when a lot of people negotiate seller assist that covers most or all of the closing costs.

I agree with lprmesia on there are better ways to raise more revenue and even lower the transfer tax. Refi tax is the low hanging fruit that is not being picked.

I do agree that it won't have a huge impact on sales, primarily because no one has a clue that this tax even exists until they are well into the process of home purchase. Had it not been for a few posts I read on here, I wouldn't have realized that I needed about 28% of the home purchase price up front in addition to my cushion. I get that some people finance some or all of their closing costs, but it isn't cool that it is a necessity for so many.

[gg]

Maybe they should cut costs and waste instead of constantly raising taxes! It is getting ridiculous. True progressives would find ways to entice people to move to the city. People seem to think there is an influx of people moving to the city, but there actually isn't. Last I check there were less people in Pittsburgh, as I recall something like 1,400 less or something like that. I wouldn't move back to the city. Why would I want to pay way more tax. Income tax higher by a lot. Home flippers also pay and home flipping should actually be encouraged. Investors fix up neighborhoods and save old homes. They make places livable again and people move in and pay taxes. Add another tax on a flip and it just keeps adding up. Sure, why not add another 1%. Lets add a drink tax. Lets add more and more taxes. This place is ridiculous. People all say, but the homes are cheap. Of course they are because property taxes are so damn high! You can't sell a super expensive home in Pittsburgh. Who is going to pay $25K a year in taxes?

[Copanut]

Originally Posted by jea6321

I agree with lprmesia on there are better ways to raise more revenue and even lower the transfer tax. Refi tax is the low hanging fruit that is not being picked.

Refi tax? Politicians always have a way to take our money. My guess is most bankers would fight that.

Originally Posted by mbw5100

Just saying: If you think it'd be a cool place to live now, you'll probably think it will be a cool place to live in 10 years. And, in ten years, you'll have high closing costs on top of what will probably be higher priced houses--and, really, they are SO darn cheap right now.

Unless they plan on building a retirement village in the Strip, I won't be in the City anytime soon.

[Lost_In_Translation]

Originally Posted by gg

Who is going to pay $25K a year in taxes?

Many of the residents of Squirrel Hill. If the city/county properly assessed home values without reducing millage, they could probably make up all the income they need without raising taxes. But it seems the way the city works is to punish the honest and lawful and occasionally bug the scofflaws for a few cents here and there whenever things get really bad budget wise.

[Merge]

Originally Posted by Copanut

Refi tax? Politicians always have a way to take our money. My guess is most bankers would fight that.


Unless they plan on building a retirement village in the Strip, I won't be in the City anytime soon.

People are pretty disillusioned with bankers nowadays. They might be easier to take on (politically-speaking) than real estate developers.

That would be a great place to retire!

[lprmesia]

Originally Posted by Copanut

Refi tax? Politicians always have a way to take our money. My guess is most bankers would fight that.

Not really a refi tax as much of a Mortgage Recording Tax that would impact both purchases and refinances (which currently see no type of transfer tax). The difference is that instead of asking for more money at the closing table (like with the current transfer tax), they could collect money on the the home with Equity.

Using Current Logic with rough estimates, not including escrows, settlement fees, etc...

2005 Purchase
Sales Price: $100,000
Loan: $80,000
Title Ins: $5,000
Transfer Tax (3%): $3,000
Cash Needed: $28,000
Cash Out: $0

2015 Same Home Refinance
Appraisal: $150,000
New Loan: $120,000
Bal of Old Loan: $67,000
Title Ins: $1,000
Transfer Tax (3%): $0
Cash Needed: $0
Cash Out: $52,000

Now converting the Transfer Tax to a Mortgage Recording Tax (there are tons of ways to do this that favor the govt, buyer, etc... but I'll just do the way Florida does it currently for example)

2005 Purchase
Sales Price: $100,000
Loan: $80,000
Title Ins: $5,000
Recording Tax (3%): $3,000
Cash Needed: $28,000
Cash Out: $0

2015 Same Home Refinance
Appraisal: $150,000
Loan: $120,000
Bal of Old Loan: $67,000
Title Ins: $1,000
Recording Tax (3%): $3,600
Cash Needed: $0
Cash Out: $48,400

The Florida model (where tax is assessed during every transaction at full value) is definitely a bit on the extreme side in terms of raising money, at the end of the day, this type of model could be used to REDUCE transfer tax on the front so less money is needed up front to purchase a home (encouraging sales) and instead is made up for (and then some) by the borrower further down the road. There are far less closing costs involved on a refi.

Other Models (such as Maryland) only tax based on the NEW purchase money. Meaning the 2015 model would be taxed only on the $20K amount ($120K new loan minues $100K original purchase price).

Also, these existing (and successful) models are STATE WIDE, not county (although some counties assess different tax rates) and NOT at the municipal level (Except NYC - which is actually 5 counties). I think it's ludicrous and dangerous to impose a non-expiring tax municipally and not on a larger level.

[gg]

Originally Posted by Lost_In_Translation

Many of the residents of Squirrel Hill. If the city/county properly assessed home values without reducing millage, they could probably make up all the income they need without raising taxes. But it seems the way the city works is to punish the honest and lawful and occasionally bug the scofflaws for a few cents here and there whenever things get really bad budget wise.

I think the city knows it can't slam the folks living in those big homes too much. There is a tipping point and those folks are also paying massive money in wage tax, unless they are a company and make no money, which some folks do because there are loopholes. Can't blame the people for being smart, but you can blame our governments that allow it.

[selltheburgh]

Originally Posted by yinzer93

Would it have a realistic chance of passing? Or even making it to the ballot? Thoughts? (Read: not just pessimistic lamentations on woe is me and my wealth) But 1% does seem steep.

It probably will make it to the ballot because they pay people to stand outside farmers markets and other places to get signatures. They don't explain it thoroughly and just say that it is a petition for affordable housing. Not that it will be a huge increase of the real estate transfer tax.