Re: flip tax
From: jkgonzalez (jerrycommunicatingwithcompassion.org)
Date: Wed, 14 Feb 2007 06:19:16 -0800 (PST)
I want to check my understanding of the transfer fee formula based on the
difference between purchase and sales price less improvements.

If I bought the house for $135,000, put $65,000 of improvements on it and
sold it 12 years later for $300,000, then the formula:
($300,000 -$65,000)- $135,000 = $100,000 * 3% = $3000

And a house bought 2 years ago for $260,000 and sold for $280,000 after
$10,000 of improvements would net $300.
Is that right?

And a follow up question:
What defines an improvement?
How do you put a value on improvements?
Some improvements are made by the owner's sweat equity.
Improvements usually don't raise the value of the house by the amount spent
on the improvement.

Jerry Koch-Gonzalez
Pioneer Valley Cohousing Community, Amherst MA 


-----Original Message-----
From: Sharon Villines [mailto:sharon [at] sharonvillines.com] 
Sent: Wednesday, February 14, 2007 8:19 AM
To: Cohousing-L
Subject: Re: [C-L]_ flip tax


On Feb 13, 2007, at 12:09 AM, David Heimann wrote:

> was only after the proponent was willing to call it a "transfer fee" 
> that
> it began its slow tortuous road to adoption.

"Transfer fee" is the standard name for this.

And the argument for it in cohousing is even greater than in a 
conventional condominium because

1. Any transfer of ownership is a burden to the community. It makes 
work. As much as we have gotten wonderful people in move-ins it is work 
for us to orient them, educate them, get them up to speed, and help 
them get settled. It is not easy.

2. Because the larger community is so involved in creating and 
supporting property values, it seems only reasonable that they should 
share in the gains.

One thing I liked in the proposals that went by was basing the fee on 
the difference between the purchase price and the sale price less 
improvements. A transfer fee based on sale price would not be equal, I 
don't think, in our community. Property values have risen such that the 
units of people who moved in seven years ago have tripled but those of 
people who moved in two years ago, paying the doubled or tripled value 
already have not increased. So a 3% fee for them would be a significant 
problem unless it was based on the difference between purchase and 
sales price less improvements.

We don't have such a fee and it would take probably 2 years to get 
consensus on it but some of those who have moved have voluntarily made 
significant donations to the capital improvements fund.

Sharon
-----
Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org
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