HELENA — State and local governments would be forbidden from imposing a tax on real estate sales and transfers under a proposed 2010 constitutional initiative ballot measure submitted Tuesday by the Montana Association of Realtors.
The group turned in the proposal to Secretary of State Linda McCulloch’s office, which kicks off a state review of the proposal.
“Ranchers and farmers, homeowners, retirees and small business already pay property taxes,” said Dennis Iverson, a former legislator and immediate past president of Montana Association of Realtors. “Real estate transfer taxes are nothing more than double taxation of property.
A real estate or realty transfer tax is usually imposed at the time of closing in the sale or transfer of property, along with other fees and charges.
Montana is among the 13 states nationally not imposing this tax or fee, but it hasn’t been for a lack of trying.
Since 2001, eight bills have been defeated in the Montana Legislature that would have enacted real estate transfer taxes. Legislators in five other cases requested similar bills to be drafted, but they were never introduced, the association said.
After fighting these proposals in four of the last five legislative sessions, the real estate agents’ group decided to be more proactive in protecting property owners from facing an added tax burden, Iverson said.
“We know this is a big undertaking, but the issue is too important to keep fighting bill by bill, session by session,” he said. “It’s time to put it to rest by letting the people decide whether they want their home to be taxed twice.”
Real estate equity is used by growing families to buy larger homes, to establish retirement accounts or to pay for college, he said.
Sen. Ron Erickson, D-Missoula, was critical of the initiative, calling it “a bad idea.”
Erickson sponsored a 2007 bill that would have levied a 1 percent real estate transfer tax on sales, but exempted the first $500,000 in property value. His bill would have put the revenue in the state affordable housing trust fund to help first-time home buyers.
“The possibility that I was looking for was to find ways to help with affordable housing,” Erickson said. “The folks who choose to buy McMansions would pay more.”
Iverson said the state review of the proposed ballot language is expected to take at least 45 days. During that time, supporters of the proposal will form a ballot committee and file the necessary paperwork and reports with the state’s political practices commissioner.
“The Montana Association of Realtors is taking the lead to place this important measure on the ballot,” Iverson said, adding that he expects support from a number of other individuals and organizations.
Idaho, North Dakota and Wyoming also don’t have real estate transfer taxes, while South Dakota does.
To qualify for a constitutional amendment for the ballot, backers must obtain nearly 49,000 signatures of registered voters by June 18, 2010, including those of 10 percent of the voters in 40 of the 100 state House districts.