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Transfer Title Tax Increase

The economic recovery has been slow because the real estate market has not recovered. Why increase the title transfer tax now?

Recent proposals to increase revenue for the city of Los Angeles have brought forth two major changes; one to increase parking taxes and one to increase the title transfer tax. It is the second proposition that I wish to address now.

 

The idea is to double the tax a person pays to transfer the title of a property from $4.50 to $9 for every $1,000 of value. That means that after a sale of a home at the median value of around $500,000, there will be a tax of $4,500 instead of $2,250. That’s significant.

 

I understand that there is a need to create more revenue in order to balance the budget and one look at my neighborhood here in Westchester shows me how far city services have fallen below what is satisfactory, but is it wise to propose increasing the taxes on transferring titles when our current recession continues to slog along because of historic downturns in the housing market?

 

Where is common sense here? Many of my neighbors are under water and haven’t been able to sell because of a dead market. Reports on the national delay in jobs recovery have shown that the slowness of our recovery is partially due to the fact that people can’t sell their house and go where jobs are. In other words, our weak housing market is killing the recovery. Here in LA, property taxes have tanked and area schools suffer harshly because of it.

 

And the moment it appears as though the housing market is picking up steam, our city council member allows the contemplation of a tax that would make it cost more to sell your house?  Step aside and allow housing prices to recover. Property values will increase and property tax revenue will rise.  Pass a tax to stymie that recovery and you get fewer transactions. The fewer home sales, the less transfer title taxes you collect, and the increase in that tax rate doesn’t increase the taxes collected because people can’t sell their houses as easily.

 

Talk about  penny-wise and pound-foolish. 

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coolguitar August 23, 2012 at 02:17 PM
Recession isnt because of slower home sales recession has to do with overpriced homes and residential units. They are overpriced due to selling them and buying with over valued loans. Really you never own the house because the loan is too high and they want 80% of your money for.next 30 years so really you never own that home but its no surprise they want you to pay taxes on something you will never own....basically anything to slow home sales is a good thing. So dont be brain washed by media telling you recession is due to slow home Sales its due to too much home selling and its.not really not a home anymore.but more of N investment...an investment you think you own but really have a small chance of owning (even after 30 years of continuous payments)
Leslie August 23, 2012 at 05:03 PM
I am not sure what dead market you mean. It's a seller's market right now so long as the home is in good shape. Decent properties are being bid on like it was 2005, and nothing on the Westside, including Mar Vista and certainly not Venice with prices per square foot as high as $1125! The only sellers in real trouble are those who are so far underwater they can't afford to sell anyway because they can't pay off the mortgage. The rest could probably negotiate for buyers to pay the additional cost of the title transfer tax, since all things are negotiable. The only houses I see not selling are those with ridiculous layouts, or with a lot of deferred maintenance that are asking prices comparable to those which have been recently remodeled. Everything else is on and gone within a week or two, max. And that's all over the Westside, Brentwood, Palisades, Cheviot, Westchester (less so there but still much like that), and the Valley hills. I wish it were a dead market so I'd have a shot at actually finding something I like! I'd pay the extra $2,500 for that.
Leslie August 23, 2012 at 05:08 PM
Oops. Should have said "nothing on the Westside is going cheap, including Mar Vista. . . " etc. Having said the above, too, I don't disagree fundamentally that burdening homeowners with a new tax in order to cover L.A.'s shortfalls is the answer. This is a big city with a lot of users burdening the system, and any tax or fee that is brought up to close the gap should have more wide-reaching impact so that it is more fair. Homeowners do not disproportionately use services. Parking I get, cars wear down our roads, so parking fees hit a user base. But a sales tax or some other kind of fairly spread utilization fee or tax seems much more appropriate to me than another property based tax that is triggered only on a sale and serves only to impact the recovery, as you noted.
Odysseus Bostick August 31, 2012 at 02:49 AM
I must apologize for not being clear here. I don't believe that low home sales are by themselves the reason that the economy is recovering more slowly. But, the inability for people to relocate in order to get a job because they can't sell their house has been a major hindrance to the economic recovery. Your thoughts?
Odysseus Bostick August 31, 2012 at 02:52 AM
I get where you are coming from here and feel your frustration in searching for a home of your own. The market does look like it will be picking up some steam. I witnessed this in full form over in Echo Park when I was managing a council campaign earlier this year.
Honey West September 05, 2012 at 12:15 PM
This city is made up of renters. This tax is going to raise rents. Goverment spending is out of control in this city. Cut spending don't raise taxes.
Odysseus Bostick September 05, 2012 at 06:02 PM
I don't support an increase in the transfer title tax.

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