Real Estate Sales Tax / The 3.8% Sales Tax on Home Sales

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First of all I want everyone to understand, that I desire this blog to be my forum for FACTS about Real Estate.  Having said that, the FACT is there is much conversation (and controversy) on the 3.8% Sales Tax that is still in the wings to be implemented January 1, 2013.  However, my first concern is that we look at this legislation and know it for what it is – regardless of any political spin or justification – a tax – and worse! – DOUBLE taxation for some!

For everyone who has said “it is a tax” – it is.  For all who feel they can justify this tax because “it will only affect a few”, then I have great concern.  Regardless of the number of “transactions” that are affected – there are PEOPLE behind those transactions that work hard to earn what they earn; to make wise investments for their future.  This is a tax on that diligence and effort.  This is a negative reinforcement for what should be considered an economic positive.

Every tax, regardless of “who” it is placed on, has economic effects that pass on to others.  If it is just the wealthier people who are affected, we would do well to be mindful that those people are the ones who generally employ people like you and me.  We also have a tendency to begrudge them for the items they can afford to buy – million dollar homes, luxury cars, $4,000 chandeliers.  Rather than be jealous of that (let’s call it what it is), let’s remember that those items, too, are built and manufactured by people like you and me.  Take away their ability to buy those items, and you take away a need for building/manufacturing those items, which means taking away the need for labor, which means job loss, and so on and so on…..

We must always remember that in life, as in nature, for every cause there is an effect.

All that being said, I have included here an easy to read brochure that fully explains the 3.8% Sales Tax on Home Sales

Lastly, let’s not forget the double taxation.  In the state of Michigan, the seller of property (except now in the case of Fannie Mae, Freddie Mac and HUD) – regardless of income – already pay a Real Estate Transfer Tax.  This rate is assessed by the State and the County in which the home is located.  The total amount is $8.66/per $1,000 of home value (sale price) – so $866.00 on a $100,000 home sale.  I do not know what the proceeds of that revenue is used for in Michigan, try as I might, I was not able to find any documentation on that.

Does anyone have any idea?

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