The Pulse Of The Kansas City Real Estate Market
The Kansas Mortgage Registration Tax that has been in effect for nearly 90 years is being phased out. Over the years this tax applied to all Kansas home buyers who purchase a home that required a mortgage loan and it was one of the items items paid at closing. The formula used was $2.60 per $1000 of loan amount, so if a buyer was borrowing $100,000, they would pay $260 tax to the state of Kansas at closing.
Many have viewed the tax as unfair and specifically targeted banks, mortgage lenders and home buyers in the state. Others have argued the tax is necessary to cover county recording fees, cover the county’s costs for county employees to handle foreclosure evictions, etc. Additionally, one cent of the 26 cents taxed per thousand was going to what’s known as the Heritage Trust Fund, which is the sole funding for many historic landmarks in Kansas. I’m really not sure how banks and home buyers became responsible for maintaining historic landmarks but that’s how it’s worked for years.
With the tax being phased over the next 5 years, the burden for the lost tax revenue will no doubt be made up somewhere. While it could mean higher real estate property taxes in the future, in the short term the plan is to try and make up for the loss with increases to the document recording fees on each closing, meaning much of the burden will still be felt by home buyers at closing. If the lost tax revenues aren’t offset by these increases, it could mean higher real estate property taxes for all Kansas counties in the future.
Posted by Jason Brown