Real Estate Transfer Taxes in Louisiana

Yesterday the Louisiana House of Representatives voted on HB 135 which is an important bill. First, let’s discuss what this bill does. Currently there are no areas of Lousiana that use transfer taxes. A transfer tax is a extra fee paid at the closing of any piece of real estate. Transfer taxes could be 2 or 3% of the value of the property. The problem with this tax is that the public generally does not receive any service in exchange for the payment of this tax. This tax is generally charged over and above the recording fees and other fees already invovled in the transaction. It’s also a form of double taxation. On any piece of property there are generally real estate property taxes which are paid by the owner of the property. So a transfer tax is an additional way for the municipality to squeeze more money out of the same property for which property taxes are being collected.

Transfer taxes could be harmful to real estate. It could force buyers out of the marketplace by making a piece of real estate unaffordable by having to deal with these extra costs. It is also an unsteady and unreliable form of taxation that doesn’t generally help the budget of the municipality. Usually the municpality trying to implement the transfer tax is trying to plug a hole in the budget or moving money into the general fund. Any way you look at it, it’s just not a helpful tax.

HB 135 is set to be a constitutional ammendment that would permanently prohibit any real estate transfer taxes in Louisiana. You can see how this would be a great thing! If this becomes law, then no municipality would be able to institute a transfer tax. What I really love about it is that our state legislators are taking a proactive approach to creating prosperity in Louisiana by prohibiting this form of useless taxation. Many areas across the country are implementing these transfer taxes and Louisiana lawmakers are taking a stand against it in advance of any local governments in Lousiana even trying it.

HB 135 passed in the House yesterday with 100 Yes votes and 0 No votes! It’s next step is to move to the Senate for approval. What you can do is write, email, or call your State Senator and ask them to support this bill. Finally, if the bill is passed in the Senate it will be on the ballot in November for the rest of us to approve it as a constitutional ammendment. Because these ammendments can be worded in weird and unusual ways, I’ll add another blog post later in the year advising on the voting for the ammendment.

If you want to keep up with the action here’s a link to the Louisiana State Legislature’s website.

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