What Would a Colorado Real Estate Transaction Tax Look Like?

Follow Us On Social Media

With Colorado home prices exploding and still no end in sight, solutions to boost access to affordable housing for Coloradans are few and far between. One potential solution that most other states have in their policy toolbox to address the issue is a real estate transaction tax.

In this issue brief by CFI economist Chris Stiffler, we look at what a real estate transaction tax would look like in Colorado, how much revenue it could generate, what that revenue could be used to fund. We also examine some of the challenges and barriers to implementing a real estate transaction tax, and why a similar current policy falls far short of what’s needed.

Highlights:

• A 1% real estate transaction tax could generate $1 billion in revenue for the state to invest in affordable housing access.
  
• Colorado is one of only 13 states with no real estate transaction tax on the books.
  
• Because of the volatility of the real estate market, using a real estate transaction tax to fund ongoing state funding for areas like K-12 education or transportation is problematic, making it an ideal funding source instead for programs that mitigate the cost of growth and real estate development.
  
• While some local governments have historically legal real estate transaction taxes, Colorado’s constitution has prohibited new real estate transaction taxes since the early 1990s. Voters would have to pass a constitutional amendment in order to enact this type of tax.

Click here to download the full brief.