The real estate market in Washington State from 2003 to 2006 was credited with bolstering jobs and revenue collections that exceeded forecasts for more than a dozen consecutive quarterly revenue reports, leading us out of the recession after 9/11. Our economic recovery is dependent on the recovery of Washington’s real estate market with real estate transactions providing millions of dollars in state and local revenue. The housing market, and the jobs it generates, accounts for 24% of the state’s employment.
However, legislators in Olympia are hoping to bridge a nearly $3 billion budget deficit, they created, off the backs of real estate agents and associative businesses, by establishing taxes on service-oriented businesses (excluding lawyers, of course), closing tax exemptions and increasing existing taxes, including Real Estate Excise Tax, the Business & Occupation tax, among others. According to policy makers, “All taxes are on the table.”
Only harm will come to Washington’s economic recovery if increases to the Real Estate Excise Tax (REET) and/or Business & Occupation Tax (B&O), or if they impose a Sales Tax on Professional Services (excluding lawyers).
- Real estate excise taxes are a volatile source of revenue and Washington is already one of the highest in the nation.
- An increased REET tax would reduce the availability of affordable housing.
- 68% of home buyers cited low home prices as the number one factor to buy now.
- Families would face higher closing costs and need even more income to qualify for a home loan.
- An increase as little as .65% in the REET means than more than 19,000 people in Washington would get priced out of the housing market, according to the National Center for Real Estate Research.
Business and Occupation Tax (B&O)
- This is a regressive tax that hurts jobs because it is payable whether or not a business generates a profit.
Sales Tax on Services
- A sales tax on business and professional services would impose multi-layered harm on housing affordability as it would be passed onto consumers in the price of a home.
- Multiple real estate services of affiliate businesses involved in the real estate transaction could be subjected to a sales tax, i.e. appraisal fees, architectural services, credit reports, mortgage origination, attorney’s fees, surverys, home inspection fees.
These are but a few examples of the issues involved with proposed legislation in Olympia. It may not appear to be something most people care about, until you try and purchase a home. Then, the increased costs will certainly be obvious to you and unfortunately those costs will be passed onto you, the homebuyer. We are hopeful that you will contact your legislator and ask them to vote ‘no’ on this proposed legislation.