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Hello LoCo… the “Goodbye Tax” is Back (Updated)

news Hello LoCo... the Goodbye Tax is Back (Updated)

Image credit: Matt Callow

Last Saturday, the Virginia General Assembly passed a new transportation bill (HB 2313) to help fund the states road systems. Part of the package is a 250% increase in the Grantor’s tax, the tax all Virginians pay when they sell a home or business property. About 4 years ago Heather wrote about the reduction of the Grantor’s tax from $5 per thousand to $1 per thousand (of sales price or assessed value, whichever is higher). At the time, the tax that the Northern Virginia Transportation Authority had imposed was ruled unconstitutional by the Virginia Supreme Court.

An article by the Washington Post outlines how our Virginia Senators and Representatives found a way to reinstate that tax. When the Governor signs the new bill into law, sellers will pay $2.50 per thousand compared to the $1 per thousand todayLoCo’s average sale price last year was $533,641, which would have meant a $533.64 grantors tax. Now, that figure jumps to $1334.41.

It’s not as bad as it could have been, according to the Dulles Area Association of Realtors (of which I am a member):

The measure originally included a 400% (.40 per $100) increase in the grantor’s tax.  Due to advocacy efforts on the part of DAAR leadership and area lawmakers, the legislation passed by the House and Senate of Virginia included a 250% (.25 per $100), a considerable concession on the part of our legislators… DAAR has written to the Governor to ask his consideration of removing the grantor’s tax completely, as he has the authority to “amend” the bill prior to the veto session.

Those LoCo politicians included Tom Rust, Jim LeMunyon, Joe May, Randy Minchew, Mark Herring and Barbara Favola voting in favor of the bill. Dick Black, Jill Vogel, Barbara Comstock, and David Ramadan opposed the tax increase. I’m not sure paying more tax ever has a silver lining, but the bill does earmark $300 million towards the Dulles Rail Project.

So what does this mean for you? You’ll have to pay more tax at the closing table as a seller, which will eat into your profits a little. If you want to know how it affects your potential home sale specifically, just ask, we’re happy to help.

Cheers,
Mike

*UPDATE*  The Virginia Association of Realtors had a bone to pick with the increase in grantor’s tax and went to work. Realizing the new rate was based on average grantor taxes collected from 2007-2011 (a huge decline in property values for our area), the Association was able to convince the Governor’s office to investigate. As a result, the tax was reduced to 15 cents per $100 and is now in the General Assembly. If you’d like to read the whole story, click here.

~~Mike