On Real Estate Transfer Taxes and Fees
If you buy real estate in a Colorado mountain resort community, you likely will find that you have to pay part of all of what is called a real estate transfer tax or fee. They can be hefty, anywhere from one percent to two-and-a-half percent of the gross purchase price of the property.
Real estate transfer taxes first came into existence in the late 1970’s. For unknown reasons, they were adopted only by mountain resort communities like Vail and Aspen. They are a government tax, the proceeds of which often get used only for designated purposes. In Vail, for example, the one percent real estate transfer tax has been used only to acquire open space and pay for open space improvements. In 1992 such taxes actually were outlawed by a constitutional amendment. Existing transfer taxes continue in effect, but they cannot be increased, and no new real estate transfer taxes are permitted.
More recently, real estate transfer fees have come into existence. They are just as hefty in amount as the taxes. However, they are not taxes and they are not imposed by governments. Instead, they are imposed by homeowner associations (by authority contained in the covenants for a real estate development). For example, there are two percent real estate transfer fees in imposed in Beaver Creek and Bachelor Gulch.
In the case of new development, these fees and taxes are typically paid by the buyer. However, in the case of resales of property, they are typically split between the buyer and the seller. So, if you sign a contract to buy mountain resort property, be sure you know what the amount of the tax or fee is and whether you have to pay some or all of it. And it is always negotiable.