People buying a home in Montgomery County may get an unexpected break as one Montgomery leader says he is investigating the possibility of a “tax holiday” to stimulate sales in the area’s bloated housing market.
Council President Mike Knapp said Monday that he wanted to evaluate cutting taxes and fees associated with home sales for a short period of time, in the hopes of spurring home sales. Knapp said he wants to know how much of a tax cut experts think is needed to give people the incentive to buy and how long the tax holiday would need to be to turn things around.
“We’re going to have to start looking locally at what we can do to move the market,” Knapp said. “We have a huge amount of inventory right now, and it’s just not going anywhere.”
Montgomery has seen huge spikes in the number of less-expensive properties hitting the market. According to the Greater Capital Area Association of Realtors, there were 21 new-single family home listings in the $150,000-to-$199,999 range last month, compared to zero in May 2007, and 204 listings in the $200,000-to-$299,999 range compared with 85 last year.
Area Realtor Barbara Miles said foreclosures could be playing a role in the “glut” and that she would love to see Knapp’s idea take effect.
“I think it would be fantastic, just to get things going,” Miles said. “When you see seven ‘For Sale’ signs on a 20-house block, it is scary.”
Patrick Lacefield, spokesman for County Executive Ike Leggett, said forgoing recordation taxes for three months would cost Montgomery about $6.2 million.
“The average residential recordation tax is about $1,800,” Lacefield said. “When you’re buying a median-priced home of more than $400,000, the question is are you going to decide to go or not based on $1,800?”
Lacefield said the county executive’s office would study the idea, however, as well as one supported by Leggett: a similar holiday but only for eligible county employees.
