In his weekly column, NC Insider reporter Scott Mooneyham asserts that the transfer tax is no different than the property tax and that buyers will just roll the payments into their mortgage much like they do with property taxes now.
A real estate transfer tax was no more or less a "home tax" than the
property tax. Just as property taxes are rolled into the overwhelming
majority of mortgage payments, transfer tax payments would have been
folded into the price of the home and become a fraction of the monthly
mortgage payment. The cost would have been foisted on buyers, not
Mooneyham misses the boat on this one by a wide margin. He falsely assumes that the transfer tax can always be passed on from seller to buyer in the price of the house. In the current buyers’ market, there is no way the seller will be able to recoup this tax. The seller will have to eat it out of his equity.
Also under his scenario, the transfer tax would be rolled into the principle portion of the mortgage payment, not the escrow account that other items, such as property tax and homeowners insurance, are paid into. Thus, a homebuyer would then be paying interest on the transfer tax for the next 30 years, making the effective cost of the transfer tax double its original charge.
(Hey wait, maybe I like his argument, that makes the case for the transfer tax even easier to fight… It’s not a 0.4 percent tax — by the time you pay interest on it over the life of your loan, you’re really paying closer to 0.8 or 1 percent.)
But let’s just assume for one minute that he is correct, that the transfer tax will be passed on from seller to buyer. That just means that the seller will raise his price 0.4 percent to account for having to pay that tax. So why then, is it the same people who advocate voraciously for " more affordable housing" are the same ones who advocate for the transfer tax. The transfer tax would only make housing less affordable, artificially inflating the cost of housing at least 0.4 percent. (Even more if you consider that the transfer tax would be paid 4 times on newly built homes – from original land owner, to developer, to builder, to new homeowner.)
Any way you slice it the transfer tax is bad. And thank goodness voters in 16 counties saw how damaging it would be to to the equity in their homes. Now as long as we don’t fall under the spell of the re-education programs, the idea of this tax can be dead and buried.