Real estate transfer tax increase resisted

Jennifer Shubinski

Friday, April 11, 2003 | 11:12 a.m.

Real estate agents are opposing proposals that would increase Nevada's real estate transfer tax, and said the increase would hurt homebuyers and ultimately home sales.

Members of the Greater Las Vegas Association of Realtors will take their opposition to the proposed increases to Carson City next week, when they plan to meet with legislators.

Postcards also are being passed out to the public to sign and send to legislators. The cards express opposition to any increase in the real estate transfer tax.

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, and Sen. Ray Rawson, R-Las Vegas, both have proposed increases in the property transfer tax.

Rawson's proposal, a $2 per $1,000 value increase in the tax, would raise the current tax of $2.50 on each $1,000 to $4.50 in Clark County and from $1.30 to $3.30 in other counties. The tax would raise an estimated $55 million a year. Rawson's office said that is on top of the $23 million already collected by the state.

Someone buying a $200,000 home in Clark County would pay a transfer tax of $900 under the proposal, up from $500 now.

Hettrick has suggested within a larger tax hike plan that the property transfer tax be increased by an additional half a percentage point statewide. That would cause the transfer tax to increase in Clark County to three quarters of a percent, to $7.50 per $1,000 from the current $2.50 per $1,000.

That means transfer taxes on a $200,000 home in Clark County would be $1,500, up from $500 now.

The increase would raise $137 million the first year, which includes what is currently being collected by the state, to begin July 1, and $151 million the second year, which begins July 1, 2004, a statement from Hettrick said.

He did not put his plan in bill form, but rather suggested taxes and cuts in a news conference last month. Hettrick said this week that portions of his plan, and other legislators' bills may come out in other forms as the tax debate winds its way through the Senate and Assembly.

"It's no telling how these bills come out," he said. "It may come out together with other appropriations. It's not too meaningful (at this stage)."

Real estate agents said increasing the transfer tax isn't going to help the state's budget problems in the long run.

"A transfer tax is a very narrow, focused tax," Mark Stark, a member of the Greater Las Vegas Association of Realtors, said. "Those dollars are on the backs of Nevada's families."

"When you're living paycheck to paycheck, any increase is a lot," he said.

Hettrick, in an interview from his Carson City office, said an increase in the transfer tax would provide the cash-strapped state with a stable source of revenue.

"(Real estate) is one of the more stable values and it is a rising value," he said. "It taxes only people who chose to buy and sell real estate."

Stark said it should not be assumed that home values will continue to appreciate at current rates.

"We could hit a bump in the road," he said. "(The increase) may not sound like a lot today, but it could be catastrophic down the road."

Rawson could not be reached for comment, but has said he proposed the real estate transfer tax increase simply for consideration with other tax proposals.

There are some exceptions for commercial real estate in both the current and proposed increases in the real estate transfer tax, Lee Barrett, the association's vice president, said.

Barrett said as the price of a home rises in the Las Vegas area, and as interest rates creep back up, even a slight increase in taxes will take the dream of buying a home out of reach for many.

"Our company sees a lot of 100 percent financing coming through," Barrett, owner/broker of Century 21 Barrett & Co., said. "Many can afford the monthly payments, but many can't afford the initial buy in."

Hettrick said an increase in the real estate transfer tax will not keep people from buying a home.

"It's meaningless. It's just hype used to kill (SB 385)," he said, adding that the tax can be included in the financing of the mortgage or negotiated between the buyer and seller.

The Senate Taxation Committee did not take any action on Rawson's bill, SB 385, during hearings two weeks ago.

Stark said the association supports a broad-based business tax. However, he wouldn't go so far as to support Gov. Kenny Guinn's gross receipts tax.

"Right now we are getting all the information and then we will decide on a plan that we are going to support," Stark said.