Dec 26, 2015
Property appraisal is a thorny issue at
best and promises to be the subject of
much debate for a very long time. Any
reform will directly affect your
business–the only question is how.
Recently we were able to get three
appraisal reform propositions onto the
state ballot and passed in a statewide
constitutional election.
Propositions 2, 3, and 5 improve the
property appraisal process, giving
homeowners a fairer shake with our
annual property evaluations for tax
purposes.
Not every association manages to get constitutional amendments on the ballot, much less passed. We’ve had six in the last three years, including Proposition 6 from two years ago, exempting Texas REALTORS® from an unfair mixed-use vehicle tax.
We’ve made progress but we have a long way to go toward making Texas a better place for private-property owners.
In Texas, we have a stable real estate
market. We’re not prone to wild
fluctuations like the left and right coasts of
the country. And our foreclosure ranking is
way down the list compared to other states.
One reason is our consumer-friendly home
equity lending law, which Texas
REALTORS® championed and passed back
in 1997. It has strong consumer protections,
like an 80% loan-to-value limit–none of
that crazy borrowing 125% of the home’s
value that you see on national TV.
Every time the legislature meets in Texas,
lobbyists for large national lenders try to
convince our lawmakers to amend our
home equity law. These efforts, if
successful, would dilute the hard-fought
consumer protections currently in place,
result in more foreclosures, and lower
property values.
Every time our state is faced with a deficit,
some Texas lawmakers look to the real
estate industry to make up the difference.
This last session, more than 11 attempts
were made to pass a real estate transfer tax.
These transfer taxes raise the cost of
purchasing homes, pricing some buyers out
of the market.
The ugly truth about transfer taxes is that
they are proposed every year. That’s
because they are seen as an easy solution to
boost government revenue.
But transfer taxes raise the cost of
purchasing homes. Some buyers are priced
out of the market, meaning no commission
at all. Others pressure you to cover some of
their high costs by lowering your
commission.
Another one that some legislators consider
when there is a deficit is a tax on services.
The last time was in 2003. It would extend
the state sales tax to all services listed on
HUD-1, including your commissions.
And now, it’s looking like we’ll be faced
with a deficit again during the next
legislative session.
During the 80th Texas Legislature, we
prevailed in exempting your personal auto
from ad-valorem taxation. And with
overwhelming passage of Proposition 6 in
the November 2007 constitutional election,
you’ll never have to worry about this unfair
tax again.
Mixed-use vehicle tax Some county tax assessor-collectors were targeting Texas
REALTORS® for an ad-valorem (property) tax on personal
vehicles. If left unchecked, this new tax could’ve spread
statewide to all Texas REALTORS® and other independent
contractors.
Vehicle value $
X 0.0275 = $
Professional feesWe opposed a legislative proposal to double the $400
fee that real estate brokers pay for their two-year license
in Texas.
Your savings: $400.00
Tax on services We defeated another proposal to extend the state sales tax
to professional services. Had it passed, your commissions
would’ve been taxed at 8.25%.
Gross commission value $
X 0.0825 = $
Transfer taxA tax on the transfer of real property would discourage
homeownership in Texas. According to a leading
economist, that translates into a 7% reduction in sales
volume. That’s why we’ve fought hard to stop repeated
attempts to pass this insidious tax.
Sales volume value $
X 0.07 X Take-home percentage
= $
Example: $2,000,000 (sales volume value) X 0.07 = $140,000 (sales volume reduction)
$140,000 (reduction in sales) X (your take-home percentage) = $ (your savings)
Now add it all up
Mixed-use vehicle tax $
Professional fees $ 400.00
Tax on services $
Transfer tax $
Your total savings: $