KINGWOOD – County governments will benefit from a change in the distribution of excise duties on property transfers.
During the 2020 regular session, the legislature passed HB 2967 amending State Code 11-22-2 “Excise Tax on the Privilege of Transferring Real Estate”.
County officials levy a $ 1.10 state excise tax for any $ 500 or fraction of the property’s value when recording property transfers in the official’s office.
In Preston County, an equal amount is raised for the Farmland Protection Board. This money remains in the district and can only be used to protect arable land.
The change in the law stipulates that 10% of the state excise tax levied will remain in the district from July 1st. Each year an additional 10% will remain in the district until July 1, 2030, the entire tax is forfeited by the district.
The amount of tax levied depends on the property sale. For the fiscal year ended June 30, County Clerk Linda Huggins collected $ 224,974.20 for state excise tax. Had this been the first year the county received the tax, it would have kept $ 22,497.42.
In the previous fiscal year ended June 30, 2020, her office raised $ 172,008.10.
“Sales have been up lately,” noted Huggins.
In the State of the County, sponsored by the Preston County Chamber of Commerce in June, real estate agent Jessica Lipscomb confirmed it, saying, “This real estate market is insane.” She attributed the boom to low interest rates and the COVID-19 pandemic.
Lipscomb relied on the reporting system used by real estate agents to report sales. Lipscomb said 194 single-family homes were sold in Preston County in 2019. A year later, 220 houses were sold.
Between January 1, 2020 and June 9, 2020, 52 homes were sold in the county, with the average list price nationwide being $ 175,000 and the average sale price being $ 168,000. Six of the homes were on the market less than a week before they went on sale.
“The total volume of single-family home sales in Preston County for that period was $ 8.7 million,” said Lipscomb.
By mid-2021, she said 86 Preston County homes had been sold. They had an average list price of $ 187,000 and the average retail price was $ 181,000. The total volume of single family home sales at the time was more than $ 15.5 million. 26 of the homes were on the market a week or less before they were sold.
Interest rates are likely to rise soon, Lipscomb said in June, but the current cost of building materials and labor shortages still make it cheaper to buy an existing home than to build a new one, she said.
The tax money is paid into the general fund of the district, which falls under the control of the district commissioner. The county’s budget for 2021-2022 is approximately $ 8.7 million.
During the regular legislative period in 2021, HB 3137 attempted to increase the speed at which the money will flow into the district. It called for 10% of the tax to go to the county this year, 30% next year and 100% of the tax to the county by 2024. The bill passed the House of Representatives, but not the Senate.
State Sen. Dave Sypolt, R-Preston, is vice chairman of the Senate Finance Committee. He said the change won’t have a big fiscal impact on the state budget, but could ultimately have a big impact on county budgets. Lawmakers wanted to help counties, some of whom are struggling with regional jail bills and other expenses, he said.