Property Tax Elimination
Throughout the Commonwealth, rising school property taxes have made it difficult for elderly homeowners on fixed incomes to pay their taxes. By eliminating property taxes and replacing the funding with personal income and sales taxes, the burden of unreasonably high property taxes would be lifted, and school funding would be fairly spread among those who consume and earn the most.
For years, REALTORS® have supported property tax elimination. In 2015, R-BAR and the Pennsylvania Association of REALTORS sent thousands of phone calls and emails, and met with State Senators from across the Commonwealth in support of SB 76, the Property Tax Independence Act.
There is bi-partisan support among voters for statewide property tax reform. However, under the current system of property taxes bolstered by school funding, some school districts receive far more than their fair share in funding from the state, because funding was allocated based on enrollment numbers that had been outdated for decades.
Pennsylvania sought to correct the issue in 2016 by enacting a Fair Funding Formula, but currently only 11% of Pennsylvania's school funding is allocated fairly through the new formulas. As a result, school districts with growing enrollments are forced to rely more heavily on property taxes to fund operations, while districts with declining enrollments benefit from the unfair funding system we have now.
The Reading-Berks Association of REALTORS®, in partnership with the Pennsylvania Association of REALTORS®, continues to support efforts by members of the PA General Assembly to eliminate or reduce school property taxes, and to fund schools fairly, without harming homeowners.
Realty Transfer Taxes
A real estate transfer tax is a state and local tax assessed on real property when ownership of the property is exchanged between parties. All types of real property, including residential, commercial, and agricultural, are subject to the transfer tax. Although the tax is generally levied on the value of the property, it is assessed only on the sales transaction instead of on an annual basis like the general property tax.
The Realty Transfer Tax takes equity from families selling their homes, and raises closing costs for buyers, pricing them out of homes that they otherwise would be able to afford. Buyers may have great credit, and the ability to make monthly mortgage payments, but lack the cash necessary to pay the realty transfer tax to complete the purchase. Pennsylvania has one of the highest transfer taxes in the nation, and the City of Reading has the third highest Realty Transfer Tax in the entire country. Buyers and sellers on a $100,000 home in Reading must pay $5,000 in transfer taxes, while they would only pay $2,000 in other parts of Berks County.
While the revenue generated by the realty transfer tax during times of economic prosperity and a corresponding housing upturn can be immense, the amount of revenue actually earned from the tax fluctuates with the housing market, making it a very unstable source of revenue.
The Reading-Berks Association of REALTORS encourages the reduction and repeal of the realty transfer tax, and opposes any and all increases to the Transfer Tax.