Property Sellers in Virginia were recently given a nice gift! Actually a reversion back to the way it was in 2007, reducing the Grantor's tax back to 1%. It was a shame to see how a transportation tax could affect real estate once again, because of the ineptitude of the politicians in Virginia.
The Supreme Court of Virginia ruled last month that the legislation creating the Northern Virginia Regional Transportation Authority and giving it the power to collect taxes was unconstitutional. In the real estate world, the related fee of interest was is the Congestion Relief Fee that charged the seller $4.00 per thousand of the sales price or assessed value whichever was the higher amount, together with the existing Grantor's tax of 1%.
With the new tax increase to 5%, a property owner selling a $500,000 home would pay a tax of $2,500 in 2008 instead of $500 prior to 1/1/08. The Grantor's tax is now at 1% again, although watch out for paying tax on the assessed value if it’s higher than the sales price, as this is a newer development, as sales prices routinely goes below the assessed value.
House Bill 1578 requires the settlement agent involved in the real estate transaction to return the congestion relief fee to the individual or individuals who paid the fee.
If you or someone you know just paid the fee (settlements closing from January 1 to February 29, 2008) you need to notify the settlement agent in writing of the correct mailing address.
Here is how the refund process will work: The Northern Virginia Transportation Authority will have until May 1, 2008 to return the funds to the Clerks of the Circuit Court in the affected localities. The Clerks return the Congestion Relief Fees to the Settlement Agents within 60 days from the effective date of this legislation. Upon receipt of funds from the Clerk of Court, the Settlement Agent will have 90 days to return the funds to the proper party.
Can’t the lawmakers in Virginia agree to just come up with a more equitable tax, and call it a tax instead of a relief fee! How about reinstating the car tax and leave real estate alone!