SB 87 and SB 88 – More Realty Transfer Tax Exemptions and Credits

Two more Realty Transfer Tax bills have been introduced. Lowering or exempting some from the Realty Transfer Tax seems to be the favorite topic among some legislators, as a total of five bills have been introduced in this session regarding the tax. These at least seem to be good exemptions.

Senate Bill 87 will exempt affordable housing from the realty transfer tax. Senate Bill 88 makes the first time home buyer tax exemption more equitable.

SENATE BILL 88 – REALTY TRANSFER TAX CREDIT FOR FIRST TIME HOME BUYERS	Currrent Status – Senate Executive 4/19/23
House Sponsors – Lambert, Bush, Johnson, Parker Selby, Baumbach, Moore	Senate Sponsors – Huxtable, Lockman, Gay, Hansen, Hoffner, Townsend
House Yes Votes –	Senate Yes Votes –
House No Votes –	Senate No Votes –
House Absents or Not Voting –	Senate Absent or Not Voting –

Senate Bill 88 alters the State realty transfer tax credit offered to first-time home buyers to make it more equitable. Currently, there is a 0.50% reduction in the State realty transfer tax for first-time home buyers for the first $400,000 of value of the property. This Bill completely exempts the first $250,000 of value of property purchased by a first-time home buyer from their portion of the State realty transfer tax and removes the first-time homebuyer tax credit for property valued at $1,000,000 or more.

Between $250,000 and $1,000,000, this bill establishes the realty transfer tax applicable to a first-time homebuyer as follows:

• (For property valued from $250,001 through $300,000, the realty transfer tax is reduced to 0.25%.
• For property valued from $300,001 through $350,000, the realty transfer tax is reduced to 0.50%.
• For property valued from $350,001 through $400,000, the realty transfer tax is reduced to 0.75%.
• For property valued from $400,001 through $999,999, the realty transfer tax is reduced by an amount equal to 0.50% multiplied by $400,000.

This provides property valued from $400,001 through $999,999 the current realty transfer tax credit offered to first-time home buyers.

Senate Bill 88 remains in the Senate Executive Committee.

SENATE BILL 87 – ALLOWING MORE EXEMPTIONS TO THE REALTY TRANSFER TAX	Currrent Status – Senate Executive 4/19/23
House Sponsors – Baumbach, Bush, Johnson, Parker Selby, Moore // Ramone	Senate Sponsors – Huxtable, Lockman, Hoffner, Townsend
House Yes Votes –	Senate Yes Votes –
House No Votes –	Senate No Votes –
House Absents or Not Voting –	Senate Absent or Not Voting –

Senate Bill 87 makes the following changes to the realty transfer tax:

(1) Clarifies that the exemption from the realty transfer tax for conveyances to or from an organization exempt from tax under § 501(c)(3) of the federal Internal Revenue Code when the purpose of the conveyance is to provide owner-occupied housing to low and moderate income households applies to rehabilitating residential properties and reselling the properties without profit and to constructing residences on properties and reselling the properties without profit.

(2) Exempts any portion of a conveyance in which it is the grantee’s intent to construct affordable housing units and the conveyances are financed using funding provided by the federal government, this State, or a county or municipality of this State for the purpose of constructing affordable housing units, defined as a residential dwelling for a household whose income does not exceed 80% of the median income for the area as defined by the United States Department of Housing and Urban Development.

(3) Exempts any portion of a conveyance financed through the federal Low Income Housing Tax Credit program.

(4) Clarifies that individuals are first-time homebuyers if they intend to occupy the property being conveyed as their principal residence after the construction of a residence on the property to include circumstances where the residence cannot be built within 90 days after the property is purchased.

This bill was released from the Senate Executive Committee and was then placed in the Senate Finance Committee, which means it will probably get released and get a vote on the floor in the coming weeks.