Join Date: 04/06/2010
Copied below is a letter to the editor submitted to the Delaware State News. You can post your opinions by clicking on "Reply."
We recently purchased a piece of land in Milton, Del. Our intention was to build a house on it this summer. When we purchased the land, we paid a transfer tax on the property. When I inquired about a building permit, I was told we would have to pay a transfer tax on the home we intend to build if we file for a building permit within a year of purchasing the property. The transfer tax to the state is 1 percent and to the county is 1.5 percent. On a $200,000 home, that would amount to $5,000. Of course, the initial transfer tax you pay is based upon your estimate of the new-home cost. After the home is completed, there would be an actual appraisal and the tax would be adjusted according to the value of the appraisal. In other words, the tax could go up if the completed appraisal exceeded the estimate or even the actual building costs.
If we wait a year and a day from the closing date on our land purchase before applying for a building permit, there would be no tax at all. As a result, we have decided to wait until next year to build our home. In the meantime, our country is in an economic recession and the building trades are hurting – the building suppliers and distributors are hurting – the local merchants are hurting – everybody is hurting. If we built our house this year, we would be helping to ease the effects of the recession on everybody involved with the building, supplying and furnishing of our home. We are one of three buyers I know of who are in the same situation. Like us, the other two are also waiting for a year and a day to elapse before applying for their building permits.
I have no idea how many other people there are out there who are waiting to build their homes because of this transfer tax. I do know that this transfer tax is hurting our economy and inhibiting commerce. I would love to hear from somebody who thinks this makes sense. I would also love to hear what our elected leaders have to say about all this – paying a transfer tax on a house that doesn’t exist. If we built our home, both the county and the state would be able to add it to the tax rolls, but as it is, they, too, are losing tax revenue as a result of this policy.
If you think this policy is a bad idea, then, I urge you to contact your elected representatives starting with the governor, your state representative and your state senator and ending with your county and local leaders. If you want to stimulate our economy, combat the recession and add homes to the property-tax rolls, then, I can think of nothing more effective than doing away with the transfer tax.