Selling Your Home in Virginia Is Going To Get More Expensive
July 16th, 2007 Categories: Commuting, Local Real Esate Sales Numbers & Things, Real Estate News, Sellers
Last week the Northern Virginia Transportation Authority (NVTA) voted to increase seven taxes in Northern Virginia to raise $300 million in tax revenues for local transportation projects.
The most important tax for residents selling their home is an increase in the Grantor’s Tax from $1 per $1,000 of your sales price to $5 per $1,000 of your sales price. The other taxes relate to vehicle registration, new car tax and various taxes on cars. Here are the all tax increases:
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40 cents per $100 increase in the real estate Grantor’s tax
2 percent increase in the rental car tax
2 percent increase in the hotel/motel occupancy tax
$10 increase in the vehicle safety inspection fee
1 percent initial vehicle registration fee (for new car purchases or those moving into the region)
5 percent sales tax on auto repairs
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$10 regional auto registration fee
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This new tax is slated to take effect January 1, 2008. It will be challenged in court– so stay tuned!
What is the Grantor’s Tax?
The Grantor’s Tax or Transfer Tax is the tax a seller pays to the county at closing. It currently is $1/$1,000 of the sales price of your home. For the average Arlington home– $739,000 the tax will increase from $739 to $3,695. It is a one time tax and only paid when you sell your home.
Why Did NVTA Raise the Tax?
Governor Kaine, as part of his legislative agenda, promoted a new transportation bill – the first in 21 years. The 21 year debate continued in the Virginia General Assembly on whether to increase taxes to raise funding for transportation projects. With most of the debate coming from the delegates outside the areas where transportation are critical (i.e, Northern Virginia and the Hampton Roads area) the bill was once again doomed. As a compromise, the General Assembly passed authority to the NVTA to raise local taxes for their own road projects. Board members from Loudon County and Manassas are questioning the General Assembly’s authority to pass its ability to raise taxes to the NVTA and may be taking it to court.
What Is the NVTA?
The NVTA was created as part of the transportation plan passed by the General Assembly and signed into law by Gov. Kaine. It is a 14–member panel made up of nine elected officials from the Northern Virginia jurisdiction, two members appointed by the House of Delegates, one appointed the Senate and two by the governor.
Arlington County Board Member Christopher Zimmerman is Arlington’s designated official on the panel and it’s chairman.
The purpose of this panel is to identify transportation projects in the Northern Virginia region and raise up to $300M/yr in tax revenue to fund its project. The idea here is causation taxing– tax the people who are living with the problem. Only they should pay for the issue– not the people in the whole state. Maybe its time for Northern Virginia to follow the lead from West Virginia and split from Richmond?
Good News/Bad News
The good news is that the politicians in Richmond have moved forward in addressing the issue of our congested roads in Northern Virginia. I commend Governor Kaine for working out a compromise that our past governors didn’t have the backbone to do.
The bad news is that only the local area is paying for it. We here in Northern Virginia are so suffocated with the traffic gridlock that we are almost grateful our elected officials are finally going to do something that most of us are willing to accept this extra tax burden while the rest of the state’s residents escape any changes. The traffic in Northern Virginia effects everything we do– our whole quality of life. The NVTA has managed to fine a way to raise $300M in tax revenue without raising daily taxes like the sales tax, gas tax or income tax.
Where is the Money Going?
$300 million is a lot of money. The large projects sited to by funded with this money is short. But it’s a start:
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- $28M for improvements to the Fairfax County Parkway
- $15M to widen the Prince William Parkway from four lanes to six lanes between Hoadly Road & Old Bridge Road
- $11M for improves bus service between the Braddock Road metro stop in Alexandria and the Crystal City/Potomac Yard corridor
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I am a big fan of mass transit– and if the politicians don’t focus on increasing the metro line or the VRE– our transportation issues will continue no matter how wide our road are.
What Does This Mean to Me?
If you are selling your home in Northern Virginia– you can save some money if you close before January 1, 2008. It’s important to price is aggressively to sell before the end of the year.
If you are buying a home in Northern Virginia– and can close before January 1, 2008– it’s a negotiating tool for offer.
This isn’t over– so stay tuned.
[…] earlier this year, to levy taxes for Northern Virginia transportation projects. I wrote about these increases in more detail back on July. […]