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What Is The New Transfer Tax Measure on the Oregon Ballot?

10-30-2012

A transfer tax is a sales tax on the sale of real estate. It's a one time fee that is paid anytime a transfer (or sale) occurs and it's usually a percentage of the sales price. Oregonians pay on average $2200 of property taxes every year which ranks them the 15th highest in the nation. (Side note: Oregon and Hawaii also have the top marginal tax rate on capital gains in the nation). Voting YES on measure 79 would stop another tax on your home.

One question my clients have been asking is, by voting YES on measure 79 would it take away any of the current funding anywhere?

The answer is NO; it's an extra tax so no government entity or enterprise will collect less money including schools.

What happens if I'm upside down on my home?

Good question, the real estate transfer tax would be owed regardless of whether you made a profit or not.

How much could this tax be?

Transfer taxes usually range from 0.1% to 4% of the sales price. If you sold your home for $200,000 it would be an additional $200-$8000.

Can this new tax impact me?

If the state legislature can impose these taxes on homeowners than if you own a home or want to own a home it WILL impact you.

From a homeowners or Seller's point of view, if you are selling a home and there is an extra 1% fee for a transfer/sales tax then for the average sale in Oregon that's $2600 of additional tax. In Oregon the Seller pays for the real estate agents' commission and they split the escrow and title fees with the Buyer. Some homeowners simply do not have enough equity to use a Realtor to sell their home and many others are very tight. If a Seller is unable to sell their home and or break even then typically the home's loan will be need to be shorted or it will go into foreclosure. The more volume of short sale and foreclosure inventory in the market place the more home values are driven lower. The more home values are driven lower the more people will not want to purchase and instead chose to rent. Less owner occupied homes create less pride of ownership and less great neighborhoods. The Seller wants the very most flexibility and income necessary so they can sell their home. Adding more cost in the form of taxes takes away more flexibility and income from the Seller making it more difficult to sell.

From the Homebuyer's point of view. This transfer tax could impact a buyer by them not being able to purchase a home or the one they want. Thousands of real estate agents have been involved in transactions that did not come together by a very small percentage such as 1% of the sales price, including me. The buyer wants a good environment for the Seller to Sell as well because they too might need to sell and if it comes down to very small margins there will be more opportunities for a successful sale verses a terminated sale.

From the Realtor's point of view, inevitably it will cause agents to go out of business. More taxes on homes means less transaction occurring overall. Less transactions overall means less agents to work those transactions. Less transactions mean more inventory and more distressed homes which lead to a depressed market.



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