Put it on the Homeowner’s Tab

It’s less than three weeks from Election Day, and this may be the most important one in a lifetime. Choices are to stay the course or take another route. Either way, the changes will affect homebuyers and sellers.

The impact will not be positive. Homeowners will pay for a lot more than school taxes and municipal taxes. We homeowners will be paying to fund health care.

I want to touch on two areas in this blog. First, the honesty that is lacking in our leadership is off the charts. Second, homeowners are constantly being tapped to pay the tab for unrelated costs. Let’s start with the election.

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Whoever gets control of the Congress needs to be honest with those they represent (a novel idea). Deceptive practices and backroom deals have become the norm inside the Beltway. The public is sick and tired of this deception, which speaks to the distrust of our leadership. One thing is certain: Real estate has suffered immeasurable harm. Families are losing their homes, and provocative headlines are as prevalent and welcome as stink bugs. On top of all of this, mortgage lenders were and are manipulating documents that are expediting foreclosures using a technique known as “robo” signing. Wow!

Attorneys general in 23 states joined in a moratorium on foreclosures, and the rest will follow suit. Bank of America suspended foreclosures in all 50 states in order to figure out what went wrong.

So what did go wrong? It is simple. Employees under control of Bank of America lied, cheated, falsified notary seals and caused significant harm to many homeowners and buyers. And the courts and judges didn’t bother to read the documents, signed them and allowed unlawful foreclosures to proceed. What’s next?

Every day it’s one negative story after another. Maybe we do have to clean house and start over—or to quote Jack Nicholson, “Maybe this is as good as it gets.”

Political issues and real estate are not strange bedfellows. For years our elected officials have cracked the code that taxing homes is an easy prey. Three percent of homeowners typically sell their homes in a given year, so imposing a transfer tax on the transaction doesn’t affect the remaining 97 percent. This is an easy-breezy way to raise revenue without angering the masses—or so they thought. This is flawed on many levels, not the least of which is that when real estate is not sold at the level you budgeted, there is still a shortfall. Where is that money coming from?

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I have always wondered where the money went. If you are only taxing 3 percent of the tax base and using it to pay for community services, what are the other 97 percent paying? Another question that always intrigued me is that if one property sold for, say, $100,000 and paid a 3 percent transfer tax, and another property sold or $500,000 and paid a 3 percent transfer tax, does that mean that the seller and buyer of the more expensive home used the county or cities services five times as much? Let’s not let logic get in the way of collecting revenue. Wouldn’t a broad base tax charging all who live in the community where they use the services accomplish the same as taxing a few for the entire tax bill?

Of course raising taxes is very unpopular and almost always costs votes, but I would rather pay my fair share than the lion’s share of what is needed. Let’s just make sure that whatever is levied is used for the good of the community, not the elected official. He or she might just lose his job.

I am not talking about raising taxes, but about distributing them in a fair fashion. Another advantage to sharing the burden of running a community is that the real estate market would not determine whether communities could sustain themselves. This would hold our political leaders accountable to their expenditures because a greater number of constituents would have skin in the game.

The government is in the homeowner’s pocket every chance it gets. As I stated earlier, it’s easy and profitable. It annoys a few. How else are they fleecing us?

This one is beyond belief: The current Congress decided it needed a way to pay for the health bill, so it decided—at the last minute and behind closed doors—to tax homeowners who fit into their definition of “rich” 3.8 percent of the sale price of their home. This is called a Medicare tax and is part of the Patient Protection Affordable Care Act (PPACA).

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I ask you: What is a real estate tax doing in the health bill? Many in Congress didn’t know it was there. You, as voters, didn’t know it was there. But it is there, and it starts in 2013.

Let me explain how it works. Remember: Put it on the homeowner’s tab.

You are defined as being rich if you earn $250,000 as a couple. In Chicago a teacher that has worked for 20 years can make $120,000 and a fireman working 20 years with overtime can make $135,000 or more. That makes them “rich,” and that means the fireman and teacher get grouped with millionaires and billionaires.

Where’s the fairness? I say tax the Congress to pay for the health care or, better yet, make them enjoy the same health plan we do.

Either way, stay out of the homeowner’s pockets. Put it on everyone’s tab, not just a choice few. Homeowners are having a hard enough time in today’s economy just paying their bills. Their nest egg is gone so the only monies left to live on during retirement would be the equity from their home.

Before you vote in the upcoming election, contact your senator and congressman. Ask what their stance is on taxing your home to pay for health care and what their stance is on transfer taxes. If it is a candidate, it is not too late to get their stance on taxing home transfers. It has to stop here and now. Looking out for your future finances is the Right Direction.

 

 

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