NC's land transfer tax headed for repeal

Posted March 3, 2011

State lawmakers took their first step today toward repealing a revenue option they gave counties four years ago – the land transfer tax. The measure, House Bill 92, passed the House Finance committee today with strong bipartisan support.

In 2007, the General Assembly gave counties the power to levy a 0.4% tax on real-estate transactions, if county voters approved the tax in a referendum. So far, counties have struck out in 24 out of 24 attempts. Now realtors and some lawmakers say the time has come to take the option back.

The bill’s sponsor, Rep. Julia Howard, R-Davie, is a realtor herself. She says the transfer tax is really a tax on equity, since the seller ends up paying it. “As a realtor, I can truly tell you that the tax does discourage home ownership. It’s regressive, and it’s certainly an unreliable tax.”

Howard told the committee that the only thing the transfer tax option has accomplished so far is the expenditure of a lot of advertising money. “A county decides they’re going to put it on the ballot, and the industry is going to come in and spend a lot of money, a lot of time, a lot of effort to defeat the initiative. And the county is going to spend a lot of tax dollars to promote the issue.”

“Let’s take it off the table and not have it come up again year after year after year,” Howard said. “It’s a loser.”

But county officials don’t want to give up the right to try again. Rebecca Troutman with the North Carolina Association of County Commissioners testified that, in the six northeastern counties that have had transfer taxes for 20 years, home sales haven’t been hurt, and property taxes have gone down.

“Opponents will label this the home tax, implying it is an annual tax on homes. Nothing could be more misleading. The property tax is the real home tax,” Troutman said. “H92 would take away the right of the voters to decide for themselves what taxing structure works best for their communities.”

But repeal supporter Rep. Paul Stam, R-Wake, said voters have already decided – county officials just don’t want to hear it. “If they were listening to their people, they would discover after 24 defeats that the people don’t want it.”

Rep. Paul Luebke, D-Durham, said it would be a “terrible mistake” to repeal the tax option. “Other than some vested interests, primarily the Realtors’ association, I can’t understand why we would take away local control.”

Luebke chalked up the transfer tax’s poor track record so far to sophisticated PR campaigns by the NC Association of Realtors, campaigns county officials couldn’t match. But he says recent ballot measures have been much closer votes. “Proponents are getting good at presenting their argument,” he said. “Allow that public debate to continue.”

House Finance didn't agree. H92 passed with only five "no" votes, as far as I could see. It’s scheduled for a full House vote on Monday night.


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  • Beulah Mae Mar 4, 2011

    The land transfer tax has been used in many states and in five counties in our own state, successfully, to aid in paying for the new schools, water and sewage systems, roads, parks necessary in high growth areas. It is fairer to ask newcomers to pay a tax on the services they must have, than to simply either raise the property taxes of existing residents or leave needed infrastructure unfunded. The only reason that 24 counties have held referendums on the tax is because local officials know that their county's needs are more important than the self serving spin doctoring of real estate interests. It makes no sense to deprive our citizens of voting on any way of generating local revenue. Let the people decide between the claims of a narrow business interest are more valid than keeping their communities healthy and economically competitive.

  • djcalaska Mar 3, 2011

    Sellers are already paying a tax fee to sell their homes. The majority party of the past did not seem to think that was enough of a contribution. They felt it was ok to ask the buyers to start paying an additional tax. It is time to start living within your means and stop trying to make the citizens pay for your mismanagement. I want to also say "THANK YOU", to the General Assembly, for the first movement to stop the ridiculous medical lawsuits plaguing this country. This is where the health care reform should have started!! Thank you Thank you Thank you!!