Board of Supervisors eyes additional real estate transfer tax

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WAMPSVILLE — The Madison County Board of Supervisors has drafted legislation to allow the county to impose an additional real estate transfer tax.

Madison County is seeking legislation that would allow an additional tax on real estate transfers of $2 per each $500. If someone were to buy a $100,000 home, they would pay $400 to Madison County. A resolution was passed by the Board of Supervisors at the Tuesday, July 28 special meeting directing the Madison County Attorney’s Office to draft the legislation.

This legislation was already being pursued before COVID-19, according to Madison County Clerk Michael Keville. The legislation is now being looked at due to COVID-19 budget shortfalls.

“Prior to COVID, county governments across the state were concerned about Gov. Andrew Cuomo’s threat to significantly diminish state aid to counties for state-mandated services,” Keville said. “Because of that, Madison County had discussions about having a real estate transfer tax. COVID-19 and the uncertainty of budgets in the near future have made it more necessary to move on this.”

With the possibility of New York State government putting a cap on state aid and potentially reducing how much the county gets, Madison County started looking for solutions.

Keville said he was aware of around five to six counties in New York State that collect a real estate transfer tax like the one Madison County is now suggesting.

“My office collects a real estate transfer tax but it goes to New York State,” Keville said. “It’s a $4 per $1,000 consideration. So it’s essentially a .4% tax on the transfer real estate. Some counties have it as .2% on the county level and I think one has it at .5%. And several matches the State.”

Keville said last year, Madison County gave the state around $770,000 in real estate transfer tax. “If we had a local tax for the real estate transfer tax, we could have raised around $700,000 in the closing fees,” he said.

Keville said he’s not a proponent of raising taxes, but with the number of state-mandated programs Madison County has, its cost going up every year, and the prospect of decreased local aid, there’s not much choice.

“I’d prefer that there are ways our county can raise tax funds without it coming from the property tax,” Keville said. “The property tax distorts home value. What I like about the real estate property tax as a mechanism is that it’s a cost that’s going to be rolled into the closing costs, one time at the point of transfer, when the deed is recorded. And then it doesn’t show up again. It doesn’t affect people’s decisions about buying a house or affect their ability to afford a home like an increase in property tax does.”

Keville stressed the proposed real estate transfer tax would only affect those that are buying a new piece of property — not current property owners who pay property taxes.

More steps need to be made before this legislation can be passed. Once it’s drafted, Madison County will need to ask New York State Legislature permission to pass the law.

If the New York State Legislature approves, Madison County will hold a public hearing on the real estate transfer tax.

“If the [legislature] goes back into session, they would vote on it and if approved, then the Madison County Board gets an opportunity to vote on it,” Keville said. “This tax isn’t done, not by a long shot. It’s still got two more steps to go through.”

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