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OAR opposes expansion of Ohio sales tax to services

The Ohio Association of REALTORS Legislative Steering and Executive Committees voted unanimously to oppose the expansion of the sales tax base to services, including those involved in a real estate transaction.

The 26,000-member REALTOR Association will actively advocate the Ohio General Assembly to strongly oppose the imposition of a statewide 5 percent sales tax on real estate services, as it will unduly increase the cost of housing and business throughout the state.

The real estate industry has played an integral role in the improvement within the Ohio economy since the onset of the economic challenges a few years ago, as increased home sales activity and rising average sales prices have helped to establish a solid foundation for the state’s current and would-be property owners. Additionally, Ohio’s commercial real estate practitioners have helped Ohio businesses – from small to large – locate, grow and flourish in the Buckeye State.

The expansion of the sales tax to every service associated with a real estate transaction threatens a fragile, but critical sector of the economy and will place an unnecessary financial burden on Ohio’s property owners.

The industry applauds Ohio lawmakers for solving the state’s financial woes two years ago, when an $8 billion budget deficit was filled without any tax increases. The resulting economic turnaround that has transpired across the state; with rising employment, a strengthening real estate marketplace and robust consumer confidence among our fellow citizens cannot be discounted.

REALTORS know firsthand the challenges wrought by the recent economic downturn. Since the market’s peak in 2005, OAR’s membership base has declined by more than 9,000, activity in the state’s housing market has dropped by nearly 23 percent and the average price of homes sold has declined by nearly 14 percent. Our recent gains in homes sold over the past two years and the modest uptick in pricing last year – while impressive – could be derailed by the imposition of a sales tax on every aspect of a housing purchase, including home inspections, appraisers, mortgages, radon inspections, title services, commissions and more.

Further, a sales tax on commercial rent leases poses a threat to future economic development by unnecessarily adding to the cost of business operations in Ohio.

The REALTOR profession is committed to selling Ohio as an ideal locale to live, work and call home. Our focus is on making our local communities attractive to both first-time and seasoned buyers, in bolstering the local economies by helping entrepreneurs open for business or expand their operations, in establishing great schools and civic opportunities, spurring job creation and building a solid foundation for a strong, vibrant and growing marketplace in the Buckeye State going forward.

Our 26,000 members embody the entrepreneurial spirit that is vital to a healthy marketplace. The men and women in our organization are independent contractors – each reliant on their personal skills and work ethic to earn their livelihood. To be sure, the proposed lowering of the personal income tax rate will be helpful and the concept of reducing the tax rate for small business will assist some of our REALTOR members. Yet, the detrimental effect imposing a sales tax on every aspect of a real estate transaction will offset any benefits associated with these savings.

The median household income for all Ohio home buyers last year was $67,100, which marked a decline from the $68,800 income level we recorded in 2011. Despite the tighter budgets, the desire to achieve the American Dream of home ownership among our fellow Ohioans remained strong as sales last year rose nearly 13 percent. Further, 42 percent of our buyers reported that they made significant financial sacrifices in order to make the home purchase a reality. Adding to the cost of a home purchase, as is being proposed with the 5 percent sales tax on all services associated with a real estate transaction, will deepen the financial burden and create a serious headwind to a sector of the economy that has begun to display some strength.

The 26,000-member Ohio Association of REALTORS is opposed to the imposition of the Ohio sales tax on all aspects of a real estate transaction because it will increase costs for homeowners and businesses and threaten the recovery of an important sector of our state’s economy.

Tags: Association news, politics