The State of Connecticut Budget proposal includes a conveyance tax on buyers of real estate. The tax imposed would be 1% of the purchase price on homes purchased above $150,000. Here are 3 reasons this proposal should not be passed:
1) Increased Taxes Will Result in Decreased Real Estate Purchases – This really is economics 101. One way to slow down purchases is to put a tax on them. I would think this is the last thing we should be doing to real estate transactions, adding a tax.
2) Increased Taxes Will Have a Domino Effect – This tax will penalize all of the other goods and services that benefit when a house is sold. The economic food chain from real estate purchases is long and far reaching. It starts at the closing where the realtor, attorney and insurance agent get paid. Then there is the moving company. After that, all of the things you need to make a house a home kick in, appliances,new furniture and home improvement projects to mention a few.
3) It's The Wrong Industry to Pick On – If you had to pick the number one industry that was down and either needs to be left alone or supported in Connecticut it would be real estate. OK, I suppose you could argue that contractors or manufacturers could be the number one industry. Either way, it's at the very top of any list. Adding a tax to an industry that is down is crazy. The federal government gives taxpayers tons of incentives to buy homes. The mortgage interest deduction and the real estate tax deduction have been a meaningful deduction for homeowners for many years. Recently, the federal government was offering a First Time Homebuyers Credit of $8,000 and a Long Time Homebuyers Credit of $6,500. These were designed to support the policy of homeownership.
ACTION ITEM: Contact your legislator if you do not want to see this tax implemented. To find your legislator, click here.
Thomas F. Scanlon, CPA, CFP®
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Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
