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Tax Revenue, Who Pays?

DEC 12, 2013 2:30pm ET
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WE’RE HEARING about school (real estate) taxes from the Keystone State. Also we hear from the City of Angels in California about its attempt to make up lost real estate tax revenue. Both topics directly involve the mortgage industry. Let’s face it, without tax dollars and revenue for governments, which no one wants to pay, things would become quite messy.

In Pennsylvania there is a bill in the State Senate (SB76) which the Pennsylvania Association of Realtors is strongly in favor of. A lot of people in Pennsylvania are paying huge amounts for school taxes which make it hard for homes to sell and can depress home prices. The stories are out there about folks who pay more in school taxes than they do for the principal and interest on their mortgage. Seniors on a fixed income are also hurting with high school taxes.

The bill in question is still sitting in committee since mid-March. That could be because the bill is 137 pages long. The bill would eliminate school taxes on real property which should make Realtors salivate. Mortgage people should also benefit if the bill ever passes since it should be a lot easier to qualify for a loan. The bill offers some alternatives for raising revenue because we cannot go without schools. The alternatives are raising personal income taxes, a hotel occupancy tax and the elimination of some sales tax loopholes.

In Los Angeles the city is trying to recoup (raise) revenue by suing some large mortgage lenders like Bank of America, Wells Fargo and Citicorp. The lawsuits allege discriminatory lending practices led to foreclosures which led to decreased tax revenue. Maybe Detroit should have looked into this? It sounds a little bit like the eminent domain tactic. I guess if you want job security these days it would be legal counsel to a mortgage lender.

Anyone out there ever have a closing blow up because of a lack of a smoke detector? Probably not. But just to be on the safe side, for a number of reasons including safety, folks in Connecticut and Pennsylvania should be aware of a new law effective Jan. 1 relating to carbon monoxide detectors. In Connecticut for all houses built before 2005 a seller has to provide an affidavit that there is a carbon monoxide detector in the house. Otherwise there is a $250 credit at closing. Where does that credit go on the new disclosure forms? The Pennsylvania law is a little easier it just requires a seller to answer yes or no about the detectors on a seller’s disclosure form.

Last week I touched on the topic of the “ultra” high net worth client’s concerns about interest rates courtesy of a Merrill Lynch newsletter. Well the “ultra” adjective is back again this week. It surfaces in a report from Realty Trac about a very large increase in foreclosure activity on homes in excess of 5 million in value. The largest number of these” ultra” foreclosures are occurring in California and Florida. Perhaps a new reality TV series could be about “ultra” foreclosures.

Based in Chelsea, Mich., John McDermott is a real estate and elder care attorney who represents both consumers and businesses. He can be emailed at jamcd@comcast.net.

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