House bill seeks to cut real estate transfer tax
10-cent decrease would cut revenues by $77m over four years, analysis says
Cutting New Hampshire’s real estate transfer tax “would put more money in the hands of the sellers and buyers” without reducing state revenues, according to Rep. Brian Chirichiello, R-Derry, who testified Tuesday before the House Ways and Means Committee, ignoring an analysis that says such a change would reduce state and county revenues by $77 million over the next four years.
Under House Bill 1478, sponsored by Chirichiello, the tax would be reduced by 10 cents, meaning buyer and seller would pay 65 cents per $100 of valuation.
But according to the bill’s fiscal note, the measure would cost the education trust fund $18.5 million a year and counties would lose $762,848 annually.
But Chirichiello said that really wouldn’t happen. He was clutching the latest report from the NH Association of Realtors that shows sales volume on closed sales rose by nearly 10 percent in December (compared to December 2016 year) and pending sales are up 20 percent. That means that more taxes would be paid which would make up for cut in the rate, he said.
“The Derry market is very hot,” he said, citing multiple offers and bidding wars over the asking price. A tax cut would increase sales even more. “I believe it’s going to be a gain,” he said.
And, Chirichiello predicted, the hot real estate market will continue to be hot for at least the next two years.
Others, however, were skeptical. One pointed out that the number of closed sales was stagnant year to date, rising only by 0.6 percent. Several others said that transfer tax revenues, while slightly ahead of last year, are behind projections.
“That doesn’t square with the picture you are paining,” said Rep. Richard Ames, D-Jaffrey. “You live a Derry, but in Jaffrey nobody is selling above the asking price there. You are waiting a couple of years before you get a bid.”
Others said that municipalities often adjust for increasing valuation in setting the tax rate so it keeps the same amount of money flowing.
Rep. Paul Henley, D-Concord, raised a broader question.
“You appear to be advocating a policy of taxation not typical for this state,” he said. If revenue from other taxes are up in a particular year, the state doesn’t lower the taxes so that the dollar amount remains the same, he said. “Nobody lowers the price of a lottery ticket when that brings in more money.”
Perhaps the state should do that, said Chirichiello. “It’s the people’s money, not the state’s money,” he said.