The real estate market in Nevada is on fire, with frequent and multi-million operations, like transfer of houses and other properties, taking place. With the correct advice, owners, sellers, buyers, and real estate professionals can save thousands of dollars. For sure, that’s good for the proprietors, but it also results in lost revenue for schools, low-income housing, and other crucial services. As the state’s next legislative session began last February 1st, a bill proposing to increase the transfer tax has been introduced to create a “critical needs fund”.
Senate Bill 68 aims to increase the real estate transfer tax by 20 cents for each $500 worth of value. The money generated would be put into the new fund, which would be used to provide support for “very low income housing”, supportive housing, and supportive services. The bill has been introduced by the Clark Regional Behavioral Health Policy Board and has been referred to the Senate’s Revenue and Economic Development Committee. If it passes, it will save thousands of people from living in unworthy conditions, but will impact the cost if you want to sell or buy a property.
Transfer Taxes in Nevada Will Raise if This Bill Is Approved
The transfer tax is a small fraction of the property’s sales price in a real estate procedure. In Clark County, the most populous in the state, it amounts to 0.51 percent, which means a transfer tax bill of $1,530 for a $300,000 home purchase, for example. Last fiscal year, Nevada generated more than $330 million in transfer tax revenue, with $177.8 million going to the state’s general fund, $63 million to the Clark County School District, and $13.8 million to low-income housing.
Despite these significant contributions, some real estate deals in Southern Nevada have not contributed to these revenue streams, and that’s what proposers of the bill are aiming to. According to a report from the Las Vegas Review-Journal, at least $27.5 billion worth of transactions in the Las Vegas area did not pay real estate transfer taxes, as the deals involved acquiring a limited liability company or another entity that held ownership of the real estate, instead of purchasing the property directly. These deals cited a transfer tax exemption provided by state law, which allowed property owners to transfer real estate to a subsidiary without paying transfer taxes. Is that fair? Well, at least, it’s legal.
This structure has enabled big companies as gigantic as MGM Resorts International to avoid paying transfer taxes on several real estate transactions, including the sale of the Bellagio in 2019, which could have generated more than $21 million in transfer taxes.
What Could Happen With the Transfer Taxes in Nevada?
Last year, the then-Governor of Nevada, Steve Sisolak, expressed his hopes that the Legislature would examine the situation as soon as possible, and called for capturing the transfer tax on these large-scale sales.However, the current Governor, Joe Lombardo, has said that he does not support any tax increase. Although it could finance medical and mental health services for the neediest, his position is closer to defending large companies that, until now, have been able to avoid paying property transfer taxes.
For the past five years, the advocacy group Mental Health America ranked Nevada in the 51st position among all states and Washington, D.C. in its annual report called “The State of Mental Health in America”. The lower part of the total rankings indicates “a higher prevalence of mental disorders and lower rates of access to care,” the group says. This is what this bill wants to fix. If you have any questions, you can consult the State of Nevada official info page here.