The fee is not being collected now
Tucked amid runoffs for the state board of education, assessor, clerk of court, state Legislature and sheriff on the Nov. 19 ballot is a proposed constitutional amendment to prohibit the state and local governments from imposing a tax or fee on real estate transfers. Supporters, including the Louisiana and National Association of Realtors and several business groups, say the measure is designed to keep the lackluster housing and commercial property markets competitive with neighboring states and give buyers a break when they write that check at closing.
View full sizeThe proposed amendment to the Louisiana Constitution is designed to keep the lackluster housing and commercial property markets competitive with neighboring states and give buyers a break when they write that check at closing. This home for sale in St. Tammany Parish was photographed in July 2009. Officials of the Louisiana Municipal Association and the Police Jury Association of Louisiana, both groups protective of losing possible revenue sources, said they are neutral on the proposition.
The Public Affairs Research Council, a nonpartisan Baton Rouge-based organization that researched the amendment but has not taken a stand on it, said some opponents say that the prohibition would "prevent transfer taxes if they are needed in the future to generate revenue."
Roland Dartez, executive director of the Police Jury Association of Louisiana, called the proposal "a nonissue for us" since the fees are not being collected now and public bodies are not eager to impose new taxes or fees.
State lawmakers last tried to impose a real estate transfer tax in 2000, with no success. Livingston Parish in 2004 tried to do the same and the attempt was declared unconstitutional because the Legislature did not approve it.
Lynda Nugent Smith, the amendment's leader for the New Orleans Metropolitan Association of Realtors, said the industry is concerned about its passage because of the way the proposition is worded: a vote for it is a vote to ban the tax or fee, and a vote against it is to allow that possibility.
"You have to vote for it to say 'no'" to the fee, Nugent Smith said. "That could be confusing" for some voters who see the word "tax" in a proposal and are inclined to vote against such a measure.
As a result the real estate industry and backers of the prohibition will spend about $260,000 on a full-blown media education campaign, including ads on cable television, newspapers, the Internet and radio through Nov. 18 to promote the issue and tell voters to "vote for amendment No. 1 to stay tax free," according to campaign coordinator Brad Lambert of Baton Rouge.
A total of 37 states have some form of tax on real estate transfers, money that goes to state or local government when property is sold.
Louisiana does not now have the fee, but Nugent-Smith said there is nothing in the state Constitution to prevent the Legislature from enacting one with a two-thirds vote.
"Passage of the amendment would prohibit the state or a municipality" from imposing one, she said. "People (in government) are looking for money in all the wrong places. We do not want this to be a temptation to them."
Norman Morris, senior vice president for the state Realtors, said Louisiana has to maintain a competitive edge since its neighboring states to the east and west, Mississippi and Texas, do not have a real estate transfer tax.
Real estate in Louisiana "has its challenges now," Morris said. "We feel any tax like this would set back the Louisiana market even further.
Jim Harris, a lobbyist for the Realtors, said that the proposal also will save money for the consumer, especially first-time homebuyers. He said a recent survey conducted for the Louisiana Realtors showed that if a home is sold for $183,500 and a 1 percent transfer tax is imposed, 5,566 families could not afford the purchase.
The proposed amendment, an outgrowth of legislation sponsored at the legislative session last spring by Rep. Rick Nowlin, R-Natchitoches, would not affect the fees charged by attorneys, real estate agents or brokers.
It would keep in place the $325 "documentary transaction fee" now charged by New Orleans -- the only city with such a fee -- but it would be frozen at that level, Morris said. The fee is expected to generate about $4.4 million for New Orleans this year.
Also excluded from the effects of the amendment if it passes are property taxes; annual parcel fees some neighborhoods charge; "impact fees" developers pay to parishes or cities when they develop property; and fees charged by parish clerks of court to record, file or maintain records dealing with the sale or transfer of property.
Ed Anderson can be reached at eanderson@timespicayune.com or 225.342.5810.