Transfer tax hike would stymie housing market in New Paltz
Land conservation and open space preservation are important projects in New York, especially in communities like New Paltz, which in the past decade has seen an explosion of commerce, culture, investment, and relocation.
In an effort to continue to protect the land and space in its town, the New Paltz Town Board has placed a referendum on the November ballot that will ask voters to approve a transfer tax increase that would establish a fund to pay for projects identified in a proposed Community Preservation Plan.
And while some support such a plan, there is also significant opposition to this increase because of its potential negative impact on homebuyers and sellers.
The tax increase, if approved, would jump from 0.4 percent to 1.5 percent and would raise approximately $240,000 for the fund, according to the Daily Freeman.
And while having such an influx of funding for preservation sounds like a great idea, in theory it has far more pitfalls than benefits.
By putting that tax burden on home sales, it could continue to adversely affect the housing market in the area.
Opposing the measure are the Ulster County Board of REALTORS®, with support from the New York State Association of REALTORS®.
The REALTORS® are in favor of procuring preservation funds, just not in this collection method as the transfer tax hike will put an additional burden on buyers to have more money available at closing, cause home prices to increase, and reduce the amount of available homes as well as affordable ones.
Additionally, this tax proposal would place a large fiscal burden on a narrow segment of the population to fund programs that benefit the entire community.
The organizations argue that there are more equitable ways to fund open spaces in New Paltz. A comprehensive plan and zoning laws that promote conservation easement programs is high on that list.
Hiking taxes hurts investment and would be doing so at the worst possible time. Like every other industry, the real estate market is trying to recover from the economic fallout of the COVID-19 pandemic. As such, now is not an ideal time to make it harder on anyone.
And it’s not just in the housing market, either. Raising the cost to buy real property for commercial purposes makes New Paltz a less competitive market to do business. So, it’s not just buyers and sellers of homes, but also investors looking to buy commercial property and then attracting retailers and other small businesses to New Paltz.
Finally, the current proposal is unclear on how exactly the funds will be used and if the fund is protected from raids to support other initiatives – like to paying down debts – and not preserving open space, which could be an unintended consequence of this proposal, if it passes on the November ballot.
Though the concept is well-intentioned, the proposed tax seems short-sighted, discourages investment in New Paltz, and places an unfair burden on homebuyers and buyers of commercial property, all at a time when the country is trying to recover from a national pandemic.
There’s no doubt that New Paltz residents support open spaces. It just seems that a better plan to get there is needed.