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Real Estate Transfer Taxes can:
Increase Funding for Equitable Development.
Affordable housing and other equitable development programs are difficult to fund. RETTs, however, can be easily designed to produce a dedicated source of funding for these programs. RETTs provide local matching funds for federal grants and leverage private funding. If a housing trust fund gets revenue from a RETT, for example, it can rely on a (fairly) predictable stream of income without being dependant on annual budget processes.
Capture Investment Entering the Neighborhood.
As new businesses, homeowners, and landlords move into gentrifying neighborhood, RETTs can capture a portion of that investment and redirect it to programs that preserve what made the neighborhood attractive in the first place, while allowing long-time residents to benefit from reinvestment along with newcomers.
Discourage Speculation.
Aggressive speculation can throw an entire housing market out of balance. Reducing speculation stabilizes rents; home and apartment prices; and property taxes. The jurisdiction as a whole benefits through maintaining diversity and affordability of its housing stock.
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