Could this be part of the reason why purchasing homes is down?

Question

I purchased my home ten years ago and there was no 2% tax to be paid to the local county for transfer of owners. Recently I looked into purchasing property in Pa and found this, in addition to other costs, were now added to purchasing a home. I was told by the realtor that this 2% tax is the counties highest form of income.

Could this be part of the reason why purchasing homes is down? People moving into an area will be paying taxes and those selling paid taxes, isn’t this just greed on the part of these counties?

Is this a common fee all over the USA?

If additional fee add up come to $10,000. - $13,000. doesn’t this mean that the buyer is actually paying $163,000.00 for a home that is only worth $150,000.00. Also this is lost investment because you have no way of getting it back when selling the home.

Since we pay taxes annually for services, isn’t this a form of double taxation which is unconstitutional (money is to be taxed only once)?

Answer 1

No, it has NOTHING to do with it.

Answer 2

Taxes have very little impact on the sales of homes nationwide, since they vary greatly by locality. There is some local effect, counties with lower taxes drawing home buyers away from counties with higher taxes, but usually only within a given metropolitan area. The big driver for housing sales and housing slumps are the interests rates available for home mortgages - the lower the rates, the more people can afford to buy homes, whereas as rates go up, people with lower cash flows are priced out of the market.

There is nothing in the Constitution about double taxation, nor does the Constitution govern any matters (except civil rights) that occur strictly within States or at the county level - all powers not explicitly granted the Federal government by the Constitution are reserved (in the Constitution) to the States, or the people. One pays income taxes at the Federal level, and may also have to pay at the State, County, and City levels too. Sales taxes are paid at the city and County level, and, on some items, sales can incur Federal excise taxes too. There are local property taxes, various Federal license taxes. and various State property and license taxes. Taxes on gasoline sales include Federal, State, and local taxes. There is no effective limit on how many times and at how many levels taxes may have to be paid.

Answer 3

As you've discovered, "transfer taxes" are another way for governments to fund their operations and you are correct about everything-- you cannot recover it, you cannot pass it on, etc. It's is simply another cost of purchasing a home.

As a long time broker, no, it's is not a significant inhibitor for buyers to purchase property.

For comparison, in California, the base transfer tax for all counties is 1% of the purchase price, plus additional markup which varies by county based on local assessments (i.e. for sewer, schools, land purchases, etc). The typical rate is 1.25%.

Answer 4

Transfer taxes are fairly common. But 2% of $150,000 is $3,000 - not $10,000 - $13,000.

You are double taxed, triple taxed constantly.

Since lenders have tightened lending requirements, fewer people are qualifying for mortgages. And with prices stalled, some buyers are waiting for the bottom.

Answer 5

your money gets taxed more then once now between gas tax, sales tax, license fee tax, etc. its just part of life i guess!!!