Focus on Real Estate


 

Initiative aims to amend constitution to prohibit realty transfer tax

 

Flathead Business Journal

Among the initiatives Montana voters will decide at the Nov. 2 general election is a citizen initiative to amend the Montana Constitution to prohibit state or local governments from imposing any new tax on transactions that sell or transfer real property.
Currently there is no existing real estate transfer tax in Montana, but Constitutional Initiative 105 takes a pre-emptive approach to potential future taxes by amending the state constitution to specifically prohibit that kind of tax on transactions that sell or transfer property such as residential homes, apartments, condominiums, townhouses, farms, ranches, land and commercial property after Jan. 1, 2010.
Proponents of CI-105 argue that the constitutional amendment is necessary because several proposals for real estate transfer taxes have swirled around in the Montana Legislature in recent years. They claim a real estate transfer tax is essentially an unfair double tax on property that would make it more difficult and costly for people selling a home.
“It would be especially hard on seniors selling a home after a lifetime of paying property taxes, for first-time home buyers trying to come up with a down payment and for Montanans who have to relocate to find a new job,” according to the proponents’ argument for CI-105 in the Montana Secretary of State’s Voter Information Pamphlet.
Transfer taxes of 1 to 4 percent have been suggested in the past, which would mean giving the government $1,000 to $4,000 from the sale of a $100,000 home. And the tax could be assessed even if the property owner sells the property at a loss.
Proponents argue that real estate transfer taxes are an unstable government funding source because they’re tied to a volatile housing market.
“If fewer houses sell, RETT revenue drops, [thereby] forcing government to raise taxes or cut spending,” the proponents note in the voter guide.
Those against CI-105 argue that the initiative would embed in Montana’s constitution a prohibition against a tax that does not exist. Detailed tax policy should be handled through legislation, not the constitution, opponents say.
“CI-105 would declare one segment of our economy a tax-free zone at the expense of all other segments,” the voter guide states in arguments against the initiative. “If CI-105 is passed, the realty transfer tax would be the ONLY tax specifically prohibited in our constitution.”
Opponents also note that the National Association of Realtors provided 98 percent of the funding to qualify CI-105 for the ballot and already has spent $600,000. Opponents further claim the constitution “should not be misused to excuse from taxation one special interest group.”
CI-105 is sponsored by the Montana Association of Realtors. A total of 51,736 signatures were received to get the initiative on the ballot.
For more information, go to the Montana Secretary of State website at sos.mt.gov/Elections.


Last Updated
Sep 19, 2017
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