Thursday, February 28, 2013

New Year, New Tax?

Proposed Real Estate Tax

In early February, the Ohio House Finance and Appropriations Committee heard discussion of a potential real estate tax change that could be implemented.  As discussed in the video- housing, construction, renovations and repairs have been exempt from the tax talks- but the real estate industry may be facing changes in the near future.

The potential service tax would be applied for all REALTORS using the sample below taken from the video.

At the sale of a home, the agent receives commission, and the tax would be applied to the commission because it is a service provided by the REALTOR

A $100,000 home sale
$6,000 commission
Sales tax sample of 6% is $360

The tax amount of $360 on a $100,000 sale sounds small, but the name of the game is to sell, sell, sell! And those taxes would add up throughout the year.  The sales tax would include a ¾% vendor discount, similar to the sale of goods.  The 50% small business income tax cut is also included in the discussions, as well as a 20% reduction- which would apply to many REALTORS as well. The main issue of concern is essentially whether or not we should be adding taxes to one of the markets with the biggest potential favorable impact on our country!

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