Article written by Larry Dietz, CCIM, Associate Broker at Saurage Rotenberg Commercial Real EstateI had written previously about a Real Estate Transfer Tax (RETT). This is a tax that may be imposed by states, parishes or municipalities upon the Act of Sale and transfer of ownership of real estate within the proposed jurisdiction. Real Estate Transfer taxes can vary across the country from very small (.01% in Colorado) to fairly large (4% in Pittsburgh).
Louisiana is one of only thirteen states remaining that do not have such a tax and we have the opportunity to join only three other states, (Arizona, Montana and Missouri) which have constitutional amendments prohibiting such a real estate tax from being imposed.
With the goal of preventing a RETT from being implemented in Louisiana, House Bill 135 (Act #425) was sponsored by Representative Rick Nowlin (Natchitoches) and Senator Eric LaFleur (Ville Platte). The bill passed unanimously in the Louisiana House of Representatives on May 24 and passed (again unanimously) in the Senate on June 13. It will appear as the only proposed constitutional amendment (#1) on the November 19, 2011 statewide ballot.
Voter Turn-out will be critical at this point.
The Louisiana REALTORS® Association was instrumental in getting this constitutional amendment through the legislature and is now focused on voter approval on Nov. 19. If approved by Louisiana voters in November this will be an extremely positive development for residential and commercial real estate owners.
Key Points on why all Louisiana citizens should support this Constitutional Amendment:
Double Taxation: Property owners currently pay annual property taxes. A real estate transfer tax is a form of Double-taxation, as you’re effectively being taxed twice.
Inequitable: As opposed to a broad-based tax, this form of taxation targets only those who invest and/or own real estate which traditionally is a small number of individuals.
Budgeting: As a source of income for government spending, it’s not a stable, consistent, dependable stream of income. This is due primarily to the fluctuating nature of the real estate market, particular in these current economic conditions.
Additionally, there can be a significant impact on the residential real estate market. A RETT, by increasing costs to moderate income families hoping to buy their first home, can effectively eliminate that goal for many families.
Currently there is no law in the Louisiana Constitution prohibiting a state or local real estate transfer tax. Orleans Parish is the only municipality that has such a tax and it’s a flat tax of $325.00 on all real estate transfers including refinances. The proposed amendment would not affect the current Orleans tax or recordation fees currently in existence in some parish/city municipalities.
Louisiana’s fiscal constraints and pending deficits are creating extremely difficult situations on the local and parish levels. Quite often instead of cutting costs, Legislators would rather increase revenue. Increased revenue typically translates into increased taxes or a new tax. This Constitutional Amendment, in essence, effectively eliminates this particular form of taxation.
The Louisiana Realtors Association is supporting this effort to eliminate the potential for a real estate transfer tax.
Please take a look at the attached link for more information.
November 19th. Constitutional Amendment #1. Vote “FOR”!
For more information click HERE.
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Larry Dietz, an associate broker with Saurage Rotenberg Commercial Real Estate, has over 30 years of Sales, Marketing and Public Relations experience. He is a Designee member of the Certified Commercial Investment Member Institute (CCIM) and CCIM Louisiana Chapter; a member of the Commercial Investment Division of the Greater Baton Rouge Board of REALTORS® (CID); as well as an affiliate member of the National Association of REALTORS® (NAR). He is a licensed real estate broker in Louisiana and Mississippi.
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).