Real estate transfer taxes (RETTs) are a surcharge on the sale of property, levied on the seller, the buyer or both parties. The fee generally increases with the size or value of the property changing hands and is most traditionally levied by state or county governments, but may also be collected by some municipalities. In healthy real estate markets, the tax can be a dependable source of revenue for affordable housing.
The city of Aspen is a booming tourist destination made up of both short- and long-term residents. Over the years, the city has struggled to house a large population of service and retail workers that cannot afford resort-town rents and home prices. Beginning in 1990 and expiring in 2040, the city funds most of its affordable housing production with a one percent real estate transfer tax. In a city of 6,700 residents, the tax generates about $6 million a year, making it the highest revenue stream for housing in the state, according to a 2013 report from Rees Consulting. The tax is imposed on all types of developed and undeveloped land and exempts the first $100,000 of each sale. Over the years, the lifespan of the tax has been extended by public vote. As recently as 2008, voters once again voted to extend the tax’s expiration date from 2024 to 2040.