Realtors group launches fight against referendum to hike Allentown deed-transfer tax

ALLENTOWN, Pa. — A new website sponsored by Lehigh Valley realtors is urging Allentown voters to reject a referendum that asks them to raise the city’s long-capped deed-transfer tax.

Allentown City Council in July unanimously approved a ballot question that, if passed by voters, would let the body increase the tax rate paid when properties are bought and sold in the city.

The deed-transfer tax is among several revenue sources for which council can't raise rates beyond what was set in 1996.

People who buy and sell real estate — houses, buildings and land — in Allentown are required to pay a 2% deed-transfer tax, with 1% going to the state while the city and school district split the other 1%.

Increasing that to 3% would see homebuyers pay an additional $2,500 in deed-transfer taxes for a home that cost $250,000; it also could raise millions in additional revenue for the city each year.

But the referendum’s approval would not mean an automatic increase; council still would have to pass legislation raising that rate.

Misleading ballot question?

Realtors throughout the region are lining up against the referendum.

It's not only because “it increases the cost of every house sold, bought or rented,” but because the wording of the ballot question is unclear, said Asher Schiavone, government affairs director for the Greater Lehigh Valley Realtors Association.

The question Allentown voters will see on their ballots will read:

“Shall Section 807(B), Revenue, of the Home Rule Charter of the City of Allentown be amended to allow City Council, by Ordinance, to remove the Deed Transfer Tax?”

Schiavone said that question “isn’t exactly transparent” about what would happen if voters approve it.

A voter could interpret that question to mean the city’s deed-transfer tax would be eliminated, not that the cap on the deed-transfer tax would be eliminated.

A 'yes' vote is a vote to remove the cap and let officials one day increase the deed-transfer tax. A 'no' vote is a vote to keep the city's 2% rate in place.

Lehigh Valley realtors are “fighting this because it's not exactly clear to voters what exactly they're voting on,” Schiavone said.

The wording is the Realtors association’s “No. 1 biggest issue” with the referendum, he said.

“We're happy for … voters to decide; that's perfectly fine,” Schiavone said. “But we want them to understand what exactly a vote ‘yes’ and what exactly a vote ‘no’ means for them and means for the housing market in Allentown.”

Schiavone said Lehigh Valley Realtors are “100%” confident voters will reject the referendum if they fully understand what it’s asking.

Allentown voters rejected measures that tried to raise the deed-transfer tax in 2002, 2004 and 2005.

Landlords 'won't eat the cost'

The Greater Lehigh Valley Realtors Association’s new website, votenoallentowntaxhike.com, says the referendum “paves the way for increased taxes and housing prices.”

Council Vice President Santo Napoli said a half-percentage-point increase in the deed-transfer tax would raise an additional $2 million annually.

He suggested council earmark any new revenue from a future increase for programs to support homeowners and first-time homebuyers in the city.

Much of those additional deed-transfer taxes would be paid by businesses, not individuals, according to the city’s data.

Since January 2023, 48% of all properties sold in the city have been bought by investors, such as developers, LLCs and holding companies, those statistics show.

But there’s no reason to think landlords and property owners would cover the cost of the increased deed-transfer tax on their own, Schiavone said.

“They're going to pass that through to their tenants,” he said. “We don't believe that they're just going to eat the cost.”