According to the Public Affairs Research Council, some states and localities charge a special conveyance tax or fee on a real estate transfer for the purpose of supplementing their general revenue or for purposes unrelated to the government expense of recording or administering the transaction.
"This conveyance tax or fee generally is called a real estate transfer tax, or RETT," PAR says. "In most states where RETTs are permitted, they are calculated as a percentage of property value or loan amount. They might be charged to a seller, buyer or both."
Under the current Constitution, the Legislature may pass statutes letting local governments take action to levy a real estate transfer tax. That action would require a two-thirds vote of both houses of the Legislature. The Legislature might also require a local voter referendum.
Proponents of RETT restrictions contend that taxes and fees on real estate transactions inhibit sales and make property purchases less affordable. Higher taxes would weaken an already troubled housing market and hamper economic recovery.
Some opponents argue that the amendment will prevent transfer taxes if they are needed in the future to generate revenue. Parishes, municipalities and other forms of local government may need RETTs to prop up budgets in lean years. The amendment further increases local authorities' dependence on state government.
Legal Citation: Act 425 (Rep. Nowlin) of the 2011 Regular Session, adding Article VII, Section 2.3.
Information for this article came primiarily from the Public Affairs Resarch Council website: www.la-par.org/.