‘Taylor Swift Tax’ on high-end vacation homes spreads to more states

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A new push has been launched by the states to impose a new push between brokers and potential buyers to impose tax on the immovable property of rich, saying that taxes have punished the most important local spenders.

Price in Road Island and Montana, from tax hikes to other houses, from the proposed transfer tax of Cape Cod of Cape Cod and La -Haveli Tax, state and local governments see a revenue gold mine in the value properties of the rich.

“This is a smack on the faces of those who spend just money here,” said Donna Krugger-Symans, Sales agent with Mot and Chase Sothabi’s International, Watch Hill, Road Island.

Tax hike is being run by populist anger on strict state budget and housing costs. The state wants to offset the expected budget deduction from spending new taxes and bills in Washington. At the same time, the housing market has become a story of two buyers, struggling to spend houses with middle class and young families, while the luxury housing market thrives from the rich all-cash buyers.

Solution for many states: tax on rich houses.

The new Levi of Road Island, named “Taylor Swift Tax”, is one of the most extreme. Popstar bought a beach house in the state’s Elite Watch Hill community in 2013.

This remedy puts a new surcharge on other houses of more than $ 1 million. For non-primary houses, or who do not occupy more than 182 days a year, the state will charge a fee of $ 2.50 for each $ 500 in the first assessment price above $ 1 million. This fee is at the top of the existing property taxes and will add large growth to luxury houses in the summer communities in the state, the newly, watch hill and other well heel.

For example, Swift’s house is evaluated for about 28 million dollars, according to the local real estate record. His current property taxes are estimated to be around $ 201,000 per year. The new allegations will add another $ 136,442 to its annual taxes, which will make her annual total $ 337,442 – even though local people say she rarely travels.

Real estate brokers say that growth targets many taxpayers who already contribute the most. The owners of the rich second-house pay heavy property taxes, but many do not use local services, as their primary residences are in New York; Boston; Palm Beach, Florida; Or other places. Their children usually do not participate in local schools, and they are immense users of police, fire, water, and other municipal services because most of the years live only for 10 to 12 weeks.

“These are the people who come here only for summer, spend their money and pay their proper part of taxes,” said Krugger-Syms. “They are getting punished just because they also live elsewhere.”

Brokers and long -term residents say that Summer residents of Newuport, Watch Hill and other seasonal beach cities are economic engines for local businesses, restaurants and hotels.

“You are just hurting those who support small business in Watch Hill, Leela Dellman Compass Office said. “You are chasing those who spend most of the money in these cities.”

Road Island is also increasing its convenience tax on luxury real estate starting in October. The additional $ 3.75 for each $ 500 above $ 800,000 for real estate purchase on real estate sale will be $ 3.75. At the same time, the standing property tax of the state prevents many ultra-richness from staying there.

Brokers say that some other house owners are considering selling and many people are stopping their shopping. While Tax Hike is not expected to lead for any important money flying alone, Joyal said that potential buyers in Road Island are already looking at coastal cities in connecticut as an alternative.

“It is always about the options,” she said. “At the end of the day it is about how they can choose to spend their discretionary dollars. Some of these are some of these beautiful coastal cities without other high taxes in the connecticut.”

Montana has passed a similar tax. The influx of California and other rich newcomers who put up in the state during Kovid increased the prices of the house and the increasing resentment on the gentifies. Meanwhile, the state’s low income tax rate and the lack of sales tax have left very little space to increase revenue to handle the necessary growth in services.

In May, the state passed two-level property tax scheme, reduced rates for full-time residents and increased taxes on other homes and short-term fare. For primary residence and long -term rental according to the price of the state’s average house, the tax rate will be 0.76%. Houses worth more than this will face a rate-by-rate system of up to 1.9% at a price above average price.

The Montana Department of Revenue hopes that the changes starting next year, the second-house taxes will have an average increase of 68%. Brokers say that some buyers are waiting to see the bill next year before making a decision to buy or sell.

“I have heard of some buyers, who placed on a break to wait for dust settling and to see what happens,” Valerie Johnson said that Bojman, with the international real estate of Purewest Christie in Montana, Purewest Christie in Montana.

Johnson said that when the tax was postponed as the owners of another house rich by legislators, it would also kill the local people who are owners of investment houses and rent them for income.

“These are small businesses for many people,” he said.

Manish Bhatt, a senior policy analyst at The Tax Foundation, said that tax hikes can be politically popular for the purpose of the owners of another home, but they rarely make for successful or efficient tax policy. He said that real property tax reforms should be widely based, rather than focus on taxpayers, who are outside just because they do not live in the full -time community, they said.

“Now to find a revenue to find the revenue,” he said. “But taxing tax on the owners of the second-house may have adverse effects-preventing them from being the owner of another house or continue themselves in those communities.”

Bhatt said, “New taxes cannot be done alone,” we know that taxes are important for businesses and individuals and can cause people to decide to buy in any other state nearby, “Bhatt said.

Estimated revenue from new taxes may also be disappointed. When Los Angeles passed their so -called “Haveli Tax” in 2022, supporters postponed revenue estimates of $ 600 million to $ 1.1 billion per year. According to the Los Angeles Housing Department, the tax levied on the sale of real estate of more than $ 5 million has raised only 785 million dollars after more than two years.

High interest rates have hurt the housing market, play a role, experts say. Nevertheless, Professor Michael Manville, Professor of Urban Planning at the UCLA Luscin School of Public Affairs, said that rich buyers and vendors also reduced the transaction in response to tax.

“Less revenue is one of the reasons for being worried because it suggests that tax can actually reduce transactions, which in turn can reduce housing production and property tax revenue,” he said.