Thursday, October 4, 2007

Private Transfer Taxes - be aware!

"Private Transfer Taxes" are out there, and most buyers and sellers are not even aware that they exist. In California, but especially in Placer County, there are new home builders who have attached special transfer fees to the property deed, which would have to paid in over and over again with every transfer of the property...FOREVER!!! From what I have heard, the builder pays this private transfer fee when they convey the property to the 1st owner...when that owner then sells the property, those fees must be paid again!

Just who benefits from these fees? They are paid directly to a designated "land trust or charity." Hmm...sounds like someone's retirement plan!!

These fees are not an isolated to Placer County, and are beginning to rear their ugly heads in other counties in California, and in other states to. Incredibly, the the National Association of Realtors found that there were no legal mandates to regulate this manipulation of the deed. The California Association of Realtors is working with the California Legislature to attempt to regulate what is going on. Of course, the parties involved that benefit from these private transfer taxes are lobbying heavily against a remedy to all of this nonsense.

These private transfer "fees" are reported to be as high as 1.75% of the purchase price. That means that if you try to purchase a re-sale home where one of these private transfer fees has been levied, you could have a rude awakening at the settlement table. 1.75% of the purchase price on a $400,000 property is roughly $7,000! Who is supposed to pay this fee? The Seller? The Buyer?....for all perpetuity! YIKES!!

Here is an article from the National Association of Realtors...


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