Real Estate Transfer Taxes

To varying degrees of seriousness, the WRA fights proposed increases in the real estate transfer tax every legislative session. However, this session the threat for serious consideration of a transfer tax increase has come early and from a potentially credible source.

A proposal to increase the transfer tax from $3 per $1,000 of value to as much as $10.60 per $1,000 was floated in a meeting of a high level commission established by Governor Thompson to reform relations between state and local governments.

The proposal to increase was the transfer tax was part of a larger plan to shift taxing authority to allow local units of government the exclusive use of all property related tax sources. Under current law, the state receives 80% of the revenues generated from the tax, with 20% remaining at the county level. Under the proposed tax shift, counties would retain their 20% but the state would receive none of these revenues. However, municipal governments (i.e.: cities, towns and villages) would be authorized to impose a transfer tax of up to 1% or $10 per $1,000, raising the total possible tax rate on buying a home to $10.60.

The WRA has steadfastly opposed any increase in the transfer tax and will continue to do so in the future. The tax is unfair because it applies to a very narrow tax base, and it is inequitable because it hurts housing affordability and harms most severely first time homebuyers and families with lower income.

For more information contact Michael Theo.

Tax Incremental Financing

Each session, legislation is introduced to restrict the use of tax incremental financing (TIFs) to help finance real estate development. Much of the political impetus for this legislation comes from local school districts that must forgo property tax revenues during the life of the TIF.

To address these and other concerns, Governor Thompson appointed a special task force in the Department of Revenue. The task force began meeting in April 2000, and has now produced a set of technical and substantive recommendations. If adopted, these changes will have a significant impact on TIF projects across Wisconsin. The recommendations include: preventing or reducing the extent to which TIFs could be used to develop previously undeveloped land, better known as “Greenfield” developments; limiting TIFs to “blighted” areas, consistent with the intent of the original legislation; preventing or eliminating the use of TIFs for retail property development; and limiting the use of TIFs to land within the boundaries of cities and villages or with developments that involve boundary agreements between neighboring communities.