Realtors are opposing a new law in Mount Vernon that increases the real estate transfer tax on home sellers. The new law, which was passed but not enacted as yet, would cost the average Mount Vernon single family home owner an additional $2,829 in taxes and will likely make it more difficult for buyers to achieve their dream owning a home.
New York’s REALTORS® generally oppose real estate transfer taxes at all levels of government. These taxes make home-buying less affordable, thus taking away from working families and individuals the many benefits of homeownership. They also make the city less competitive economically with other cities by raising the cost of purchasing real property for both residential and commercial purposes. Local governments should be considering legislation that promotes tax equity, homeownership, and economic development, rather than further exacerbating the problem by imposing even more taxes.
The new Local Law 4 of 2023 authorizes the City to increase the transfer tax from one percent to one and one half percent, without a voter referendum. Other transfer tax proposals, particularly those tied to community preservation funds, at least give the locality’s residents the opportunity to vote in favor of or against the tax. That the Mount Vernon legislature could enact this tax without a voter referendum is problematic, as the tax would be imposed on the seller who would have little to no opportunity to weigh in on the proposal.
REALTORS® recognize that the COVID-19 pandemic and economic shutdowns negatively impacted the finances of local governments. However, federal funding was made available to localities to help address the revenue losses associated with the COVID state of emergency. Inflation and mortgage rate increases have since made homebuying less affordable, and an increased transfer tax would further undermine efforts to address the ongoing housing affordability crisis.
The median sales price for a home in the City of Mount Vernon was $565,750 as of March of 2024, a decrease of 7.3 percent from the twelve-month median of 2023. Inventory remains low. The city’s Comptroller estimated approximately $1.31MM in additional taxes in 2023 to be paid by the seller transfers, had this increase been in effect. However, the projection does not account for the decrease in transfers which would have resulted from the imposition of the increased tax. The tax increase would have caused sellers to pass on the cost to buyers, imposing an additional $2,829 cost to homeownership.
The typical American household has an average of $5,300 in the bank, according to the Federal Reserve 2019 Survey of Consumer Finances. That’s a third of the median down payment on a starter home, which is $16,1000 or 7% for first time buyers. The imposition of an increased city transfer tax coupled with existing buyer closing costs would put homeownership further out of reach in Mount Vernon.
This would also exacerbate the dreams of African American, buyers which comprise of approximately 80% of buyers in Mount Vernon. The current homeownership rate for African Americans in New York State is 34%, which is lower than the 44% homeownership rate for African Americans in 1968 when the Fair Housing Act was passed. This community is in a housing crisis. Mount Vernon’s transfer tax increase adds to the crisis, instead of works to resolve it.
If you agree that Mount Vernon does not need this increase, contact your City Councilmember.