Private Property Rights
City and County governments have discovered a new type of property tax to assess on private residences. This tax is called private transfer taxes (PTTs’) placed on individual properties located in a new subdivision. This tax could add an additional cost to the seller up to 1.75 percent, or more, of the sales price. The tax is being used settle legal disputes (lawsuits) between the developer, a governmental agency. Usually an out of court settlement is reached between the developer and the agency. The agency abandons the lawsuit in return for the developer agreeing to impose a PTT on the property involved in the conflict.
The PTT is imposed on every home buyer, after the first buyer, purchasing a home in the development to pay the tax for a period of 20 years or in perpetuity. The length of time that this tax is imposed depends on the agreement between the developer and the Governmental agency.
Usually the PPT is located in the covenants, conditions and restrictions (CC&R’s) the homebuyer receives during the escrow period but,could also be in the deed. The builder can designate the proceeds to whatever orginazation he prefers .The money does not have to be designated to improve the current affordable housing problem and does not have to stay in the community where the tax is originated. It could be designated to another state or ?
