As Virginians continue to be bombarded by tax increases, many are having to make do with lower sales taxes, which are increasingly a problem for middle-class families.
We spoke to Virginia real estate lawyer,weichtert, who said she thinks the state’s property sales tax system is “a bit of a mess” and is in need of a “revitalization” that would provide tax relief to low-income families.
“It’s a mess,” she told us.
“I think we’ve gone too far in the past with this.
There are a lot of people who don’t have the ability to sell.
The state’s a good place to buy real estate.
There’s a lot going on with property taxes that are not in line with the needs of a lot or a majority of the population.”
In Virginia, real estate agents pay an annual property tax of about $1,600 on a $1 million sale, while homeowners pay $5,000.
And for the last six years, a new state law has been making the property tax payments even harder for Virginia homeowners.
But a bill that would allow homeowners to deduct the sales tax from their taxes was recently introduced by Virginia State Senator James VanDeMint, R-Richmond.
In the bill, which would apply to all property sold between Jan. 1, 2019, and July 31, 2020, it would exempt from the property sales taxes of $1.1 million or more.
“What we’re seeing in Virginia is a whole host of real estate companies going bankrupt,” Weichterl told us, pointing to the real estate industry in Virginia.
“And we’re going to have to do a whole bunch of work to sort of get this right.
The property tax rate is $3,200.
And when you’re going bankrupt, you’re actually not paying anything.
You’re paying nothing in taxes.
It’s a $5 billion tax loophole.”
While the tax breaks are appealing, they’re not a solution for everyone.
“We don’t want to make it easier for people who have been struggling with their taxes to get back to work,” Weicherts father said.
“When people are going bankrupt they don’t get back the money they paid in taxes.”
But Weichers father and others are not against the idea of changing the way Virginia’s tax system works.
Weichters family owns a property in the Richmond suburb of Richmond.
Weiches father, who has not filed his taxes, is hoping that the new legislation will help reduce the amount of tax owed to Virginia.
In addition to the tax break, Weichetts father wants to change the way the state calculates the property’s value.
He is also hoping that other changes, like allowing Virginians to deduct their mortgage interest and home equity tax payments, could make property taxes more fair.
“For some people who are going through bankruptcy, they have no way to recover their property tax,” Weigherts said.
And he said that Virginia could help these people by introducing a property tax break for homeowners with $1-million in sales.
Weighers father said that if the bill passes, he and his wife would like to see more of the state increase the property taxes on properties over $1 billion.
“But I think that the most important thing is that we all take responsibility for our own finances, that we pay our taxes, that our taxes are paid, that the state is a good provider for us, that they are fair,” Weihtert said.