For all of you Arizona natives you might be thinking, "What is a Real Estate Transfer Tax?" If you are from the East Coast or one of the other states that currently have a real estate transfer tax, you more than likely have had the opportunity to experience this tax first hand. A Real Estate Transfer Tax is a tax on transferring real property (your home) to another entity (i.e. a buyer).
So who cares? We are one of the 14 states that don't have this tax.................yet. Every time the state of Arizona gets in the red they set up a 'blue ribbon committee' to study additional revenue source. As I write this, the State of Arizona has an estimated 1.7 billion dollar deficit. They are currently 'studying' enacting a transfer tax here in Arizona.
Here is the first problem I have with a transfer tax....you don't make anything more affordable by taxing it. Since our real estate median home price has increased over 100k in the last 5 years it has been increasingly difficult for Arizona teachers, other civil servants and just working class folks to purchase a home. Consider this, in order to keep pace with this type of housing inflation the average teacher's salaries would need to be about 35k more than it was just 5 years ago....I can assure you that has NOT happened.
Secondly, aren't we already taxed on our property value? In fact, we are even taxed on the inflation of such value although we might not even benefit or actually realize that appreciated value. Since the value of my home has decreased in the last year, the taxes I paid last year were on appreciation that I never realized. That is a pretty good deal for the State of Arizona. Why should the state double tax my home?
The last huge problem with a real estate transfer tax is that it will continue to get bigger, and no matter what the Arizona legislature initially thinks, it will in no way be 'temporary'. The state might like to start us out on a 'teaser tax rate' with exemptions for the first 100k and very low percentages to start, but how long with those teaser rates last? Hopefully we have learned our lesson with the mortgage debacle...those teaser rates eventually go up and we and our children will all pay the price! Here is some additional information regarding a proposed Arizona Transfer Tax: