Don’t let it come to this

Your bottom line is at stake.

by George Stephens   How much would you be willing to invest in an endeavor that increases your income by $2,432 each year for the rest of your real estate career? Go ahead and get your calculator out–I’ll wait.

That kind of return would really be worth something, wouldn’t you say? I know what you’re thinking: There must be some kind of catch. Well, yeah. I plucked that number out of the air. Your actual amount might be less. Or it could be more. Let me explain.

During the 78^th Legislature, a plan surfaced that would have taxed real estate commissions. This scheme would have raised the state sales tax to 7.25% and expanded sales tax to all services except medical and dental. If local sales taxes were added, you’d be looking at a 9.25% tax in many areas.

How would that tax affect you? Maybe a few sellers who would have listed with you will try to go it on their own. Closing costs will go up, which would affect financing and buyers’ decisions about how much they can afford. Some clients might pressure you to take a smaller commission to make up for the sales tax. It’s not hard to imagine a scenario where you would be involved in fewer transactions and being paid less for your services.

Don’t forget about the other side of the equation. Every time you run an ad, get legal, financial, or most other services, you will pay tax.

So, I’ll ask the question again. How much would you be willing to invest to fight a tax on services?

Perhaps you’re wondering why I’m bothering with this, since the proposal to tax services was defeated. I wish I could believe the issue was dead, but this isn’t the first attack on real estate commissions, and another is bound to surface–maybe as soon as a special session that could be called early next year to address school finance.

What can you do? Contact your local board and invest in the Texas Association of Realtors^® Political Action Committee. TREPAC not only helps us battle a regressive tax on services but also works to elect officials who can address other concerns of Realtors^® and private-property owners. Need an example? Last election, TREPAC efforts helped defeat a candidate who proposed a tax on real estate sales that would have put property ownership out of reach for many Texans.

Every investment in TREPAC matters. You do not want to look at an issue like a tax on services from the wrong end and wonder what might have been had you made that investment.

Photo by Jerry Jones/JonesImages.com.

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