Property Tax Relief For First Time Home Buyers

Yesterday, there were 23 single family homes for sale in Anchorage priced between $350,000 and $399,999. These homes were on the market an average of 23 days. Many received multiple offers or escalation clauses. With a 7% mortgage rate for 30 years the buyer will pay $2,650 in principal and interest; $l00 for insurance and $560 per month in property taxes. In Wasilla that same buyer would pay $404 per month in property taxes and in Boise, Idaho, a frequently touted out of state home community, they would pay only $195. My point is simple. Anchorage residents pay too much in residential property taxes. It is not just the interest rate, the high cost of a new build at over $350 per square foot that’s preventing buyers from purchasing a home but Anchorage’s property tax burden. Wasilla homeowners would pay a total of $4,792 in property tax. Anchorage residents would pay $2,000 more or $6,720. Boise would pay $2,237. A simple way to reduce the cost of housing would be to implement a sales tax to offset residential property taxes. Maybe even a seasonal tax on tourists and out of state workers. I’m not advocating the Seattle sales tax of 10% which did not prevent me from visiting the city a couple of weeks ago. And I don’t believe that our booming tourist season, purported to be the best ever with a spend of $49 billion, would be hurt by a seasonal sales tax.

Anchorage can have town hall community meetings for 18 months, but I doubt it will accomplish any reduction in our high cost of housing. It would take courage for the assembly to implement a sales tax designated to reduce residential property taxes but that is the fastest vehicle for a reduction in the cost of our housing and it is the one thing that we, as citizens, can have control over. We have no control over the price of oil; mortgage interest rates; the price our builders pay for lumber, but we do have and should have local control over our taxes and Anchorage. When compared to other in state and out of state communities, charges are now far too much in residential property taxes. And,yes, it is true, I am a homeowner, a business owner and a residential land developer. I pay a lot of residential property taxes and most years, I can afford to pay those taxes. But for a first time home buyer the difference of $2,000 per year between Anchorage and Wasilla is maybe the difference between an extra 100 square feet of living space or a half bath over five years. And for our departing millennial’s it’s maybe between the difference of a two bedroom apartment or a three bedroom ranch home on a fee simple lot. Perhaps, if for no one else, property tax relief should be given to first time homeowners. Or at the least a graduated tax relief program based upon a tax assessed value capped at the average yearly sales price as reported by the MLS.