VAR Capitol Connections

From taxes to contracts to transportation, the real estate market is profoundly affected by Virginia's legislature. Every week during the General Assembly session, VAR brings you Capitol Connections: a comprehensive and concise summary of the previous week's legislative actions affecting Realtors^®, property owners and prospective buyers. VAR encourages you to stay informed about the legislative process for the sake of your business and your clients. (Read previous issues of Capitol Connections)

Realtor® agenda clears Veto Session

Wednesday, April 8th, marked the so-called "Veto Session," the one-day reconvened session for legislators to consider vetoes and amendments Governor Tim Kaine had made to bills passed during the regular General Assembly session.

Governor Kaine vetoed 12 bills (including several identical House and Senate bills), most of which dealt with either guns or capital punishment; none of the vetoes concerned Realtor^® bills.

Several bills introduced by the Virginia Association of REALTORS^® were amended last Wednesday:

House Bill 1788 and Senate Bill 1276, VAR's alternative septic system bills, were amended to clarify that once regulations directing the maintenance of these systems have been promulgated by the State Board of Health, localities can no longer prohibit new permits for qualified alternative septic systems. (The estimated effective date for this legislation is March 1, 2010, depending on the exact date when the new regs are promulgated. Stay tuned for more information once we know it.)

House Bill 1680, our vested rights bill, was amended with technical language to clarify that accidental fires would qualify a property owner to re-build under the vested rights provisions.

VAR worked with Governor Kaine and his staff on both of these amendments and supported each.

So….all in all another successful year in Capitol Square for Realtors^®.

Now that the 2009 session is finished, what are we going to work on next year?

The Public Policy Committee has already begun working on our legislative agenda for 2010. Two issues that have emerged are further enhancement of professional standards and the development of a universal sign ordinance.

VAR staff, lobbyists and members will work through the summer and fall to craft initiatives that may go forward to the 2010 General Assembly session.

In addition, VAR staff will be in discussions with statewide candidates and House of Delegates candidates on housing issues that they, or we, identify as being important to you or your clients.

Let's talk tax credits

As Capitol Connections readers will recall, VAR was instrumental in seeking the introduction of several housing tax credit bills. Due at least in part, if not entirely to this year's state budget deficit, none of these bills passed.

At a time when homebuyers need all the nudging we can give them to get back into the market, we believe tax credits that can be used at closing or to help offset down-payments are one way to help your clients.

VAR supported tax-credits ranging from $1,250 per single individual, all the way up to a $5,000 tax credit per married couple.

General Assembly staff determined that there would be a fiscal impact of between $40 million and $150 million a year, depending on the amount of the tax credit as well as how many homebuyers used it.

While the "price-tag" to the Commonwealth looks large at first glance, especially in the economic times in which we find ourselves, consider the effects on the state treasury each time a Virginian buys a house.

Use the average price of a home in Virginia, which is roughly $285,000.

First take out the taxes that are paid in the transaction. These are non-negotiable and set out in the Code of Virginia:

Recordation tax (paid by the buyer): $713 per transaction into the State General Fund
Grantor tax (paid by the seller): $285 per transaction into the State General Fund

Next, look at the taxable revenue (income taxes and sales taxes) that is produced:

Commission (Based on a 6% sales commission): $17,100
Mortgage origination fee: $2,850 (using a 1% lending industry standard)
Other ancillary revenues: $2,850 (using a 1% industry standard)
- Appraisers
- Home inspectors
- Home repair
- Movers
- Lawn service

All in all, nearly $24,000 would flow through a typical residential real estate transaction on an existing home (there is even more on new homes).

Almost $1,000 of it is immediately recouped to state coffers, while the additional $23,000 will go into other Virginians' pockets to be used on other things. Most will eventually flow through and result in increased sales and income tax collections.

With all that new information, consider the effects of a housing tax credit, it seems to us that the state is making money on that $5,000 per home tax credit.

$5,000 seems to be a pretty good investment for the Commonwealth of Virginia…don't you think?

See how your RPAC investment paid off this year?

RPAC is people: It's not vote-buying or wasted money thrown at legislators who don't think like we do. It's monetary backing for candidates who support our issues. Political campaigns take money, and with RPAC's support, that real estate friendly candidate stands a better chance of getting elected.

And how does he or she vote once in office? For the issues that he or she has always considered important: especially pro-real estate legislation.

See how that works?

And there is no better time to see how critical your investment in RPAC is than during the session.

So invest in RPAC today (It really works: 6 out of 7 VAR bills PASSED this year).

Become a trusted advisor and advance real estate issues

Encourage your current and past clients to join the Virginia Homeowners Alliance. VAR offers a box full of tools you can use to inform current, past and prospective clients about homeownership and the legislative issues that affect the value of their home. Visit www.VARealtor.com/VHA for tools you can use to engage your clients in a way that's relevant to them and rewarding for you.