On your ballot Nov. 8th you will find a referendum vote on whether or not to add a 4% Meals Tax to the existing Sales Tax of 6%. Let’s examine how this can impact your life as a property owner or prospective buyer in Fairfax County.
It is commonly accepted that real estate values are fluid and tied to changes in the market. Of course there are still those who believe that their property has inherent value based on an array of anecdotal indicators such how much they paid for it, how much they have put into it, or even how much they love it. The truth is that the only indicators that will really determine the value of your home in a competitive sales market are Location, Condition, and a Comparable Market Analysis. The reason I point that fact out is to establish a baseline for my argument that a Meals Tax increase to a net 10% could effect property values and hence your return on investment.
If imposed the meals tax will apply to all prepared foods and beverages, not just those acquired at restaurants, it will also include alcohol when served with a meal, grocery stores (rotisserie chicken, coleslaw…), delis, food trucks, convenience stores, caterers, movie theater concessions, hotel food services, coffee shops, and more. Currently Fairfax County has a competitive advantage over some area jurisdictions like Arlington County, The City of Falls Church, The City of Alexandria, The City of Fairfax, the Towns of Vienna and Herndon and others. Our existing meals tax is 4% less than many of our neighbors. That discrepancy drives consumers to our communities and increases economic activity. One local jurisdiction that could reap some benefit to its business owners would be The Town of Clifton, assuming their governing body doesn’t impose an additional meals tax. Bear in mind though that from a real estate perspective they would be dragged down along with the rest of the area.
You see, Fairfax County (which includes Tysons, Reston, Fair Oaks, Springfield, The Mosaic District and others major economic engines) by way of its lesser tax, draws interest from businesses looking to provide those services and companies who’s employees will consume those goods. This is the essence of economic stimulation – we are, and have been, enjoying the effects of a virtual economic vacuum that draws commerce to our communities. And what does that mean for your property value? You guessed it, it is buoyed by the increased economic activity.
Make your own decision on the meals tax referendum but don’t do it believing that this is free money for schools that won’t have consequences. Changes in the economic landscape always cause ripples.
If you need help with a real estate related issue please give Julie and me a call at 703-980-4045. We would welcome the opportunity to help you and save you money on your next real estate transaction.