New Corrales Ordinance Angers Local Brokers

At last month's Village Council meeting in Corrales, NM, councillors voted unanimously to adopt a new ordinance regarding sales tax impositions on real estate sales and construction and home improvements, despite vociferous opposition from many well-known local real estate brokers.

According to an article in the Corrales Comment, the measure imposes a gross receipts tax reporting requirement meant to insure that the Village of Corrales receives sales tax revenues on homes and imporvements made in the village, rather than having such sales tax revenues be inadvertently misdirected to Albuquerque or Rio Rancho, where real estate brokers and contractors often have their offices.

The new measure calls for Village permit signs to be posted on home sales, home construction, and remodeling projects so that all sub-contractors and other parties doing business at the site will be notified that the gross receipts taxes they charge on their invoices need to be coded correctly on their CRS forms (from the Taxation and Revenue Department), so that the village receives the revenues. The permit fee will cost $35. On the motion of councillor Gerar Gagliano, the measure was amended to provide that real estate brokers offering a home for sale did not have to pay for the permit at the time of listing, but rather would have to pay the fee at the time the property actually sold. This was in recognition of the fact that, particularly in the current market, brokers might otherwise have to pay the fee only to have the home fail to sell during the course of the listing. The council refused the suggestion from local broker Peter Parnegg that that the $35 permit fee be collected by the title company at closing. Although real estate brokers turned out in force to oppose the measure, indicating their feeling that this was not what was needed now, with the state of the economy, the council heeded few of their objections or suggestions, and voted 6-0 to approve the measure.

A similar measure was enacted in recent years in the village of Los Ranchos de Albuquerque, and it was reported that the measure resulted in an additional $400,000 in revenue for that village. The village staff indicated that their research showed that Corrales had probably lost $150,000 in revenues over the past five years due to misdirected gross receipts tax on home sales, leading the council to consider the measure appropriate.

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