Proposed switch tax to be paid by property sellers resurfaces in Ulster County Legislature | Information

KINGSTON, N.Y. — For the second time since the coronavirus pandemic struck, Ulster County lawmakers will consider instituting a new tax on landowners who sell their property.

Ulster County Legislature Chairman David Donaldson has proposed a local law that would impose a 0.1 percent tax to be paid by the seller at the time the property is sold. Co-sponsoring the bill are legislators Laura Petit, D-Esopus, and John Parete, a registered Democrat from Boiceville who ran as a Republican.

Under the proposal, the county would levy a tax of $.50 per $500, or 0.1 percent, against all property sales in the county. That means the tax on a $500,000 sale would be $500, while the tax on a $750,000 sale would be $750. Revenue from the transfer tax would go to the county, unlike the mortgage tax, which is paid by the buyer at the time of purchase and goes to the municipality in which the property is located. 

Donaldson said that, based on 2020 home sales, the county could generate roughly $1.1 million by implementing the 0.1 percent transfer tax.

“We’re going to need revenue regardless of how you look at it,” Donaldson said. He said that implementing the transfer tax, which he said would cut “a teeny bit” from the seller’s profit, would have a lesser impact than a property tax hike would have.

Last year, Donaldson and Legislator Lynn Archer proposed a 0.2 percent tax on all property sales exceeding $500,000. That plan was pulled by the sponsor amid opposition from other county legislators.

Donaldson said he would like the money generated from the tax to be dedicated to funding housing issues that plague the county. A recent housing study found that one-third of homeowners and half of the county’s renters are living in housing that is unaffordable to them and that a significant portion of county residents spends more than 50 percent of their income on housing.

“I want the money to be dedicated to housing issues, whether it’s a fund to help people pay rent or funds to encourage developers to put up housing or someone in the Planning Department to assist towns with their zoning laws,” Donaldson said. “My mindset is earmarking it toward housing would possibly keep housing costs down.”

Donaldson said that the most recent proposal will likely face an “uphill road,” both from other county legislators as well as the state Legislature, which must give the county permission to implement the new tax.

Minority Leader Ken Ronk said GOP lawmakers opposed the prior proposal and expects they will oppose this one as well.

“We’re already taxing people when they buy a house. We don’t need to tax grandma and grandpa when they move too,” Ronk, R-Wallkill said. “For a lot of these people, this is their retirement. This is what they’ve been building their entire lives for, and now we’re going to take ours off the top.

Ronk also criticized Democrats for what he said is taking the “easy way out” by implementing new taxes rather than working to reduce spending.

“I believe it was Ben Franklin who said there were only two things in this world that could be guaranteed, death and taxes. Well, the Democrats in the Ulster County caucus want to prove him right about one of them,” he said. “I would rather see the chairman and others work together with us to try to find savings anywhere we can rather than institute a new tax.” 

Donaldson said he expects lawmakers to begin debating the resolution asking the state for permission to impose the new tax in March.