Welcome to Reliberation Sign in | Help
in
Latest Most Popular Active Watch List Amigos  
Metro Detroit Real Estate Voice

Timely tips and news from Metro Detroit real estate expert, AL BLOCK, serving all Detroit suburbs, focusing on the Tri-County area of Macomb, Oakland, and Wayne Counties.

State of Mighian, Governer Jennifer Granholm proposes to tax services . . . real estate.

By: Al Block
Thursday, February 08, 2007 9:35 AM

Just days after her Michigan "State of the State" address to the Michigan Legislature, a proposal to tax services by 2% is gaining momentum.  We are already allowing foreign competition ruin our Detroit/Michigan manufacturing business, so the proposal to fix the State's budget problem . . . tax the service industry.  Our service sector, especially housing, is what is keeping this state alive.  Tax it and kill it.  It is hard enough to sell homes in Metro Detroit, the last thing needed to discuss is a tax on real estate services, whether I pay it "our-of-pocket" or pass it on to the seller/buyer.  Michigan real estate sales are already being taxed by the Headly Amendment of 1994.  Michigan home sellers pay .75% of the sales price to the State.  That is $1,500 on an average sale of $200,000.  So now, for example, if the real estate fee of 6% split by two Brokers is $12,000, each Broker will be responsible to submit the 2% tax on the gross $6,000 received.  That is $120 each or $240 total.  Who pays it and how?  The listing Broker is technically paid by the seller, and then the listing broker pays the cooperating agent.  Will the listing Broker be responsible for the tax if the cooperating broker does not file properly?  Have the seller pay it in addition to the transfer tax?  Have the buyer pay as a sales tax for buying a house, just like buying a car?  All I know, it is getting more difficult to produce the bottom-line to support my business, my family, etc..  Tax my commissions in addition to heavy self-employment taxes most Realtors alread pay???  Crying

As much it would be good to say, "Great, tax services, just exempt real estate due to it already being taxed."  That is not a fair argument.  The costs of services will rise and people will make a choice then to not utilize those services.  If those services have less money to spend in the economy, the tax revenue from regular sales taxes will plummet.  Michigan needs to wake up and provide a tax system that is "investment based".  Meaning, create a tax code that is win-win.  We need to "fire up" this economy, not give incentives to "not spend money".

<< Read More at Reliberation.com

Comments

Mike  Robins
Member Since '06

Mike Robins said:

Hello Al,

As with most Factory based states our government with the global one world order has lost touch with the real backbone of our country. It is very sad to talk to people that move to Arizona from places like your state, I am working with a GM engineer right now that took an early package and left the state. It seems that in a move to compete with foreign imports this has become the norm. The fact is that due to lost revenues to the states they feel that if you can afford to purchase or build a Home you can cough up another few hundred or thousand dollars so they can maintain that needed cash flow.

Here we are faced with a new fee base for building that dream Home that in Sept. goes from 1500 to 3500 impact fees and an increase in the permit fees as well.

It is most disturbing that these states are going over everything in there income base to slightly increase all the things that we really do not have a choice on other than not to buy or build.

As with most things these fees will have to be passed on in order for us maintain our business'.

The best thing for us to do is support REPAC and let them know what we need and how we feel.

February 8, 2007 9:35 AM
David J. Barone
Member Since '06

David J. Barone said:

The State has no money.

Reversing the SBT, which most agreed HAD to go, cost the state a ton of money. The state is going after every avenue it can to raise funds. The only way to protect us from unfair taxation is to contribute to REPAC.

http://www.realtor.org/rpacweb.nsf

It is our strongest voice, and best way to sway legislative decisions.

February 8, 2007 1:36 PM
Scott Hines
Member Since '04

Scott Hines said:

The reality is..the reason the states have no money is becasue they refuse to control their own frivilous spending. The governor Mike Easley from my state, NC, has proposed a tax on ALL professional services. Its been shot down in the past, however I'm sure it will be re-introduced at some point. RPAC stated for every $100 tax on our services, it will put 1200 people out the buying market. I don't even want to do dispence with the multipliers on that figure.

Think about what constitutes a professional service... landscapers, CPAs, home inspectors, handymen, attorneys. Where would it end. If this governor has his way, he will undoubtedly undo everything entrepreneurs in this state have labored for. The slow, painful death of the small real estate company will ensue. If you earned six figures, you're already paying 40 cents on the dollar in state and fed taxes for the money you "earn". But Wait! Theres more!!! We get to spend even more money in taxes for the things we must have such as medical insurance, autos, groceries, etc.

It really burns me up and will not get any better until more young people get involved.    

February 10, 2007 10:56 AM

Add a comment

To post a comment you can sign in using a Point2 ID. Sign in.
Don't have a Point2 ID? Join Point2 NLS or post as a guest.

My Blog

Al Block
RE/MAX First, Inc.

Al Block
Member Since '04

recent comments
"why the market is the way i..."
Al Block
"real estate it s just a job"
Al Block
"do you know the code or is..."
Al Block
"countrywide recognizes poin..."
Al Block
"are agent rebates to buyers..."
Al Block
"point2 forms advisory council"
Al Block
"the long tail thing finally..."
Al Block
"Metro Detroit Real Estate S..."
Al Block
"Metro Detroit Real Estate S..."
Al Block
"Metro Detroit Real Estate S..."
Al Block

News

Al Block,abr,gri,sres,qsc Associate Broker/Appraiser Metro Detroit Real Estate Expert www.alblock.com www.metrodetroitrealestatevoice.com mailto:alblock@remax.net