A healthy housing market is critical to our economic recovery. Everyone knows how important it is to own your own home. Home ownership provides stability, financial security, safety and a lifetime of memories. But some people may not realize how critical home sales are to the island economy. For example, the average home sale in Puerto Rico generates over $35,000 in economic activity from things like remodeling, appliance sales, new furniture, moving costs and sales commissions.
FOR THE ISLAND ECONOMY TO GET BETTER, WE NEED A HEALTHY HOUSING MARKET.
But now we are faced with new and higher sales taxes, not only on the things we buy everyday but also on many of the professional services that we use. Puerto Rican families are already burdened by excessive sales taxes. A poll conducted for the Puerto Rico Association of REALTORS shows that 86 percent of Puerto Ricans feel that island sales taxes are too high. But now families have to pay even more in sales taxes, and a new sales tax on services.
These new sales taxes on services will have a devastating effect on the housing market. Higher taxes mean people will have to pay more to buy or sell a home. Many families will be priced out of the market, leading to fewer home sales and an additional drag on the economy.
For example, our research shows that the closing costs for a $200,000 home will increase by more than $1,700 in taxes! If the seller passes those costs on to the buyer, around 3,600 families who currently qualify to buy this kind of home would no longer be eligible because their annual income would not qualify them for a bank loan.
Just those 3,600 home sales would result in $128 million dollars in economic activity – spending that will not happen with these new taxes in effect.
If the new taxes are not passed on to the buyer, the seller will have to pay the taxes, taking away hard earned equity and creating a disincentive to sell a home.
Enough is enough. We need to tell our elected officials to stop raising our taxes. These new taxes will make buying and selling a home too expensive for thousands of Puerto Rican families. That is the last thing that we should be doing. We should be encouraging home sales, not making it harder and more expensive. Home sales are critical to getting our economy moving again. Most importantly, we need to keep home ownership affordable for Puerto Rican families.