E-mail Story
Print Friendly
Send E-mail
Reprint story
Journal North: Home | Sports | Opinion | Obits | Entertainment
Sunday, March 01, 2009
Tax May Target Older Homes
By Kiera Hay
Journal Staff Writer
A provision excluding 19 different property classifications from a hotly contested proposed tax on upscale Santa Fe homes is provoking questions from opponents.
Specifically, some argue that older, established Santa Fe neighborhoods, particularly on the east and north sides of the city, will be most affected by the tax, because many were built before Santa Fe's affordable housing laws, which now require 30 percent of new homes in a development to be priced affordably. The proposed excise tax would not apply to the sale of houses in developments built in conformity with the affordable housing laws.
"In light of the 19 exemptions, it just seems to be targeting older homes, not new and future communities," Santa Fe Association of Realtors CEO Donna Reynolds said in a recent interview with the Journal.
She added, "The way this thing is working and all the exemptions, those older homes will pay the tax into perpetuity."
But Councilor Rebecca Wurzburger, a co-sponsor of the ordinance, said she was comfortable with the exemptions.
And as for the exemption related to affordable housing, "I'm comfortable with that exemption in particular as something that makes affordable housing further possible in this city. That's exactly what this initiative is all about," Wurzburger said.
She added, "This is not an initiative that targets one group on the east side of town. That's absurd."
In June, the Santa Fe City Council unanimously agreed to ask voters to approve an ordinance that would levy a one percent transfer tax on the portion of any home sale over $750,000. A few months later, in an attempt to ward off a legal challenge from the Santa Fe Association of Realtors, the wording of the proposed ordinance was changed to impose an excise tax on a buyer's use of real estate and title company services during a property purchase over $750,000.
If approved, the tax would mean an extra $500 tax on a $800,000 home purchase, $1,500 on a $900,000 sale or $2,500 on a $1 million sale. City residents will vote on whether to implement the tax in a March 10 special election.
The 19 exemptions in the ordinance range from commercial property to family transfers. They're the work of the city's Housing and Community Development Department and the city attorney's office, according to department director Kathy McCormick.
"I think they're the right exemptions," she said.
Exclusion of homes that already have some sort of affordable housing connection was specifically suggested by housing staff, McCormick said.
"To have them pay that tax would be having them pay twice," she said.
Realtors Association president Baro Shalizi has predicted the excise tax, with exemptions, will generate less than $400,000 or $500,000.
"The ordinance itself has 19 exemptions in it, which means there are numerous houses that won't fall into this," he said.
In contrast, the city of Santa Fe's latest estimate, based on the last year of home sales, projects that the tax will generate $600,000 in revenue. Prior revenue estimates, based on older information gathered during a more flourishing economy, had been as high as $1 million to $1.5 million.
The city hasn't studied the ordinance's exemptions to determine how many units fall into the various categories or how much money their sales might have generated, McCormick said.
She did, however, dispute arguments that the exemptions mean predicted revenue will be lower than the $600,000 currently expected. When the city conducted its revenue analysis, she said, exemptions were not a factor.
"I think the most important thing to understand is the revenue numbers are only generated off (Realtors') Multiple Listing Service sales. Having them say it's going to be less than that because of the exemptions is not a great argument," McCormick said.
If anything, McCormick argued, revenue might be higher than expected because some high-end homes tend not to be listed on the MLS.
19 Exemptions To Excise Tax Proposal
The are 19 exemptions to the excise tax Santa Fe voters will consider implementing in a special election March 10. They are:
1. Any property which is part of a development subject to Santa Fe affordable housing requirements, as well as other types of permanently affordable housing.
2. Property where a governmental entity is purchaser or seller.
3. Property where the seller is a charitable or religious organization.
4. Gifts.
5. Any termination of a joint tenancy of property except where additional consideration is paid in connection with the termination, or a partitioning of property held under common ownership unless a payment is paid in connection with that partitioning.
6. A transfer of property due to death, will or decree of distribution.
7. Transfers made in conjunction with the mergers or consolidations of corporations, or by a subsidiary of a parent corporation for no consideration other than cancellation or surrender of the subsidiary's stock.
8. Any deed or conveyance made and delivered without consideration for the purpose of confirming, correcting, modifying or supplementing a transfer previously recorded, making minor boundary adjustments, removing clouds on titles or granting easements, rights-of-way or licenses.
9. Any decree or order of a court determining or resting title, including a final order awaiting title in accordance with a condemnation proceeding.
10. A deed granting or conveying title to cemetery lots.
11. Any property lease, provided the lease does not constitute a de facto conveyance of the property.
12. A mineral deed or royalty deed.
13. Transfers to secure a debt or other obligation, or transfers or release or property which is security for a debt or other obligation.
14. Any executory contract for a property sale under which the buyer is entitled to or does not take possession without acquiring the title, or any assignment or cancellation of such a contract.
15. Any deed conveyance under expectation, sale, or foreclosure sale under a power sale or court decree of lien foreclosure, sheriff's deed, public trustees or treasurer's deed.
16. Commercial property.
17. Undeveloped land.
18. An interspousal transfer of property.
19. A family transfer between parents and children or grandparents and grandchildren.
You also can send comments via our comment form
|
|
