March 26, 2013 – Under legislation Gov. Bob McDonnell is set to sign into law, the Grantor’s Tax property sellers must pay will go up July 1, 2013 from 10 cents per $100 to 35 cents per $100.
The upshot: If you’re selling your home this spring as two of my clients are, try to close before Tuesday, June 30 in order to pay at the the existing rate of 10 cents per $100. Keep in mind there could be a rush to close on that Monday and Tuesday so best to aim for that week beforehand.
This 250% increase — ouch! — does come with the projected benefit of more state transportation revenues funding road improvement projects in Northern Virginia, including Metrorail’s Silver Line extension to Dulles airport and Loudoun County.
For the sale of a $500,00o home, the Grantor’s Tax in a settlement in June is $500. After June, it will be $1,750.
The Northern Virginia Association of Realtors (NVAR) “applauds” the efforts of Gov. McDonnell and the General Assembly for what would be the “first meaningful infusion of transportation revenues in nearly 27 years.”
The soon-to-be-law, aka House Bill 2313, reportedly provides close to $900 million a year in statewide funding and more than $300 million annually for Northern Virginia. We certainly could use it!
“In a perfect world,” said NVAR in a statement here, “we would prefer not to tax real estate transactions at a time when the market is on the verge of recovery. However, NVAR has honored its commitment to be part of a transportation funding solution so long as other industries are also part of the solution.”
Jurisdictions in Northern Virginia and Hampton Roads will have the ability to collect additional funds dedicated soley to road and transit projects. Of course, that would mean higher local taxes, albeit with the peace-of-mind that those monies would stay ‘home.’
Working closely with NVAR were Delegates Dave Albo, (R-Springfield) and Jackson Miller (R-Prince William), and Senator Janet Howell (D-Reston). This trio succeeded in reducing the initially proposed Grantor’s Tax increase of 40 cents per $100 to the 25 cents per $100 in the bill.
Among the alternatives to the Grantors’ Tax increase was a local income tax increase of 1%. In the end, the Gov. McDonnell’s highly-touted transportation funding bill raised revenue from several sources including an increase in the sales and use tax, car titling fees and hotel occupancy taxes. All of those taxes are still said to be lower than those in D.C. and Maryland.