Council Considering Raising Realty Transfer Tax To Fund Low-Income Housing

PITTSBURGH (KDKA) -- Every time you buy or sell a home, you pay a special sales tax -- called a realty transfer tax.

"A transfer tax is a percentage of the sales price of a piece of property normally split between a buyer and a seller," said John Petrack, executive director of the Realtors Association of Metropolitan Pittsburgh.

"The state of Pennsylvania charges one percent. The city of Pittsburgh, inclusive of the school district, charges a collective three percent," added Petrack.

That's $4,000 in taxes on every $100,000 you pay or get when you buy or sell a home in Pittsburgh.

At four percent, Pittsburgh's transfer tax is double the tax paid in most suburbs.

Now city councilmen Daniel Lavelle and Ricky Burgess want to raise the transfer tax by another one percent to fund the city's Housing Opportunity Fund to help low-income residents.

"The money is to build more affordable housing, to rehab existing housing, and to give rental insurance and other resources that people who are having trouble in the homes can stay in the homes they are already living in," Burgess told KDKA money editor Jon Delano on Tuesday.

Council members like Burgess and Lavelle say the city has a shortage of 17,000 affordable housing units.

But will raising the transfer tax on anyone who buys or sells property in the city really be the answer?

Realtors say it's really going to discourage folks from buying in the city, and hurt more than it helps.

Petrack says this tax will cause city home sales to drop "by 15 percent."

Buyers, says Realtor Charlene Haislip, will buy outside the city to avoid the tax.

"Avalon has affordable housing. It's right next to Brighton Heights [in the city]."

"I don't believe this will make things worse," insisted Lavelle.

At five percent, Pittsburgh would have the nation's highest transfer tax, but Lavelle says the fund would help first-time low-income buyers.

"If you're talking average home value of a hundred thousand, this fund will actually be able to help those individuals looking to purchase those homes."

Burgess hopes council approves their bill this fall.

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