With the millions of dollars expected from Breckenridge’s short-term rental tax proposal, will Breckenridge be reducing the 1% real estate transfer tax for buyers who want to call this town their home?

Breckenridge has a chance to make a direct and immediate impact on attainable housing by simply reducing the 1% transfer tax. Maybe Breckenridge will consider a moratorium on its own 1% transfer tax, at least while the town takes time to examine results from its new well of short-term rental taxes.

The transfer tax increases the hurdle rate for homebuyers because it demands more liquid funds to close. Many buyers simply do not have an additional 1% of the purchase price just sitting in the bank for the town’s purse. Financed homebuyers need to generate enough liquid funds for their down payment, which can range from 3% to 10% of the purchase price to meet average lender requirements. In addition, these buyers have closing costs, which may or may not also require liquid funds. On top of this, Breckenridge adds a 1% tax on the price, increasing the total amount of liquid funds a homebuyer needs to possess at the time of sale. Some homebuyers could use that 1% for other things, like moving costs, buying furniture, taking years off their mortgage payments or simply savings for a low snow year.

Using a percentage of the purchase price as the basis for this transfer tax — in lieu of, say, a fixed fee — also allows the tax amount to increase in direct proportion to the appreciation of housing. For the past 30 years, housing has appreciated. Thus, each year, the town receives more tax money from every home purchase, and the hurdle rate becomes even higher for its own people trying to make their life here.