Following on the heels of the January 1, 2008 increase in the Grantors Tax which will impact all sellers in our area, we also are learning how falling housing prices are hitting the budgets of Fairfax, Loudoun and Prince William Counties as well.
For sellers who manage to get to the closing table by December 27th of this year the Grantors Tax on the HUD-1 will only be $500 on a $500,000 sale. Waiting until January 1st will cost you an additional $2000. Some of you may ask why if the increase doesn’t take effect until January 1st do you need to close by December 27th. The reason is simple. The county offices are closed on December 31st so your deed will not be recorded prior to January 1st. So if you already have a settlement scheduled you may want to see if you can move it up a few days to make the deadline.
With the notice that the Grantors tax is about to increase five fold and the announcement that most
Northern Virginia Counties (Fairfax, Price William and Loudoun) are facing significant budget shortfalls residents may need to brace themselves for both cuts in services and perhaps an increase in property tax rates.
Though the counties have not announced an official change it doesn’t take a genius to figure out that the money has to come from somewhere to keep essential services running. Fairfax County for example depends on real estate taxes to finance 60% of its annual operating budget.
With the value of homes declining an average of 9% means the county could be facing a budget deficit of $120 million dollars by the beginning of the next fiscal year.Currently the county charges 89 cents per $100 of assessed value. With the projected budget deficit for 2008 and the projection that real estate values will remain flat for a few years
the county needs a 20 cent per $100 increase to keep from looking at significant issues, including halting building new schools, halting planned county funded road projects and freezing staff salaries.
So hold on to your seat folks. The market decline could hit us in places we hadn’t even considered yet.
Cindy, what a whammy for Virginia sellers, who seem to be taking a bigger whack than anywhere else in the area with prices. They raised the transfer and recordation taxes here, and for a while they were a total of 3%, split between buyer and seller.