Posted by Leonard Steinberg on February 19th, 2012
Many un-informed people are sometimes outraged by the commissions brokers earn for a real estate transaction in New York: its usually 6% and sometimes 5% for more expensive listing. This commission is split between buyer and seller brokers 50-50, so the average transaction leaves the broker between 2,5-3% of the sale price……often for doing many months of pretty intense work, often requiring years of experience to facilitate. And then the broker has to share a good percentage of that commission with the company they are affiliated with….and then they pay taxes on that income.
Granted, on a $ 2million sale that is quite a bit of money. Well, now comes the zinger: the taxman, who performs NO work of any kind during the transactional process, collects several taxes because, well, why not? It’s the taxman and it needs your money for all kinds of really useful endeavors…right? And the rich aren’t taxed, remember? On a $ 2million financed transaction, the taxman collects almost SIX PERCENT of the transaction between 1,825% transfer taxes, 1% MANSION taxes (yes, a 2 bedroom 1,600sf is a MANSION!) and 2,8% mortgage recording taxes. That’s well over $ 100k to the taxman, and yet relatively middle class New York luxury real estate buyers are told they do not pay enough in taxes?
So now Obama wants to take away the one important tax deduction to homeowners, the mortgage interest tax deduction…..the one thing that rewards buyers for investing in real estate, one of the very largest job creators in the US economy. I think this is simply STUPID!
Buyers of $ 2million homes in New York are NOT rich. That’s a severe distortion that needs to end.