Bill would give tax break to first-time homebuyersApr 18th, 2018 · by Matt Bittle · Comments: 1
DOVER — Lawmakers on Tuesday introduced a bill to exempt first-time homebuyers from an increase in the realty transfer tax enacted last summer.
To balance the budget, the General Assembly bumped the tax on home sales from 3 to 4 percent in July, against protests from realtors and some legislators.
That tax is split unevenly between the state and counties, with the state getting 2.5 percent and the county where the sale takes place receiving 1.5 percent.
The seller and the buyer each pay half the tax.
House Bill 380 would exempt individuals who have never owned a home before — in any state, not just in Delaware — from paying their share of the additional tax for the first $400,000 on a building purchase.
Essentially, a first-time homebuyer would receive a credit of up to $2,000.
“The real estate community got hit hard with that bill, and this is an attempt to make it a little bit easier, give them something that they can entice people to come and buy homes,” main sponsor House Speaker Pete Schwartzkopf, D-Rehoboth Beach, said.
The measure would be retroactive to August 1, meaning any qualified individual who bought a house since then could receive a refund through the Division of Revenue.
It would cost the state government approximately $3.5 million in the first fiscal year and $4.5 million in the second.
The bill has bipartisan support.
All three counties currently have programs offering tax breaks to first-time buyers as part of an effort to encourage homeownership.
Kent exempts both the seller and buyer from its share of the tax, while Sussex and New Castle require the seller, but not the buyer, to pay the .75 percent fee.
All parties must still pay their half of the 2.5 percent that goes to the state.
“The dream of homeownership is a cornerstone of the middle class, a key to social mobility, and the bedrock of safe, stable communities,” Senate President Pro Tempore David McBride, D-New Castle, said in a statement.
“We should be doing everything we can to bring that dream within reach for first-time buyers, including modifications to the realty transfer tax.”
The House unanimously passed legislation giving judges greater discretion in cases of juveniles illegally carrying a gun.
House Bill 306 now goes to the Senate.
Current state law requires anyone over age 15 to be tried as an adult for possession of a firearm during commission of a felony, itself a felony carrying a sentence of up to 25 years.
The bill would not just raise the minimum age one year but would also allow judges to send cases where a gun was possessed but not used during the commission of a felony to Family Court as opposed to Superior Court.
“If a youth was using the weapon as part of the offense, then it would remain in Superior Court, but if you just happened to have the weapon on another count, like just caught with drugs or something like that, they would have the option of leaving it in Family Court,” Rep. J.J. Johnson, D-New Castle, said after the vote.
Rep. Johnson attempted to make the change as part of a bill dealing with several other juvenile offenses last year but was forced to amend it out.
The version passed Tuesday was approved only after he introduced an amendment as part of a compromise with the Department of Justice.
The original form of House Bill 306 simply stated that anyone charged with possession of a firearm during the commission of a felony could be tried as an adult at age 16 or older, containing no provision mandating a teen be tried as an adult if he or she fired or displayed a gun during a felony.
While it wasn’t his preferred option, Rep. Johnson said he was satisfied with the amendment.
Reach staff writer Matt Bittle at firstname.lastname@example.org
This past week Home Builders’ held its annual Legislative Reception at Dover Downs Tuesday night. The Reception is a great way for legislators to hear from members about various topics relevant to our industry- but in an informal setting over nibbles and adult beverages.
This year about 60 HBADE members and Legislators attended and talked and socialized. We were joined by representatives of St George’s Vo-Tech High School talking about our partnership with them to help students build sheds see the video: http://nahbnow.com/2018/03/hba-of-delaware-helps-students-build-sheds-raise-money/#comment-826464
We were also joined by Jerry Howard, the CEO of the National Association of Home Builders. Jerry was in town that day to help us discuss with legislators the problems with Delaware residential electric licensing and how it has slowed the housing market, slowed hosing productin and impacted builders and home buyers. We distributed a series of talking points to legislators, a copy is here: Click here HBADE Talking Points
Enjoy the slideshow of pictures from the evening!
To help our members make sense of the recent federal tax changes, Brian Stratton and Mike Easton of the Horty CPA firm presented a seminar on March 13, 2018.
Although tax laws and discussion of such can be a dry subject, it seemed to keep everyone paying attention for 90 minutes, with lots of Q&A. Afterward one member even thanked us for the seminar, proclaiming “I believe it was very helpful to a lot of member companies”. Kudos and our thanks to Brian and Mike of the Horty Group for their presentation.
Anyone wishing to obtain a copy of the distributed information should ……. Click for Horty Tax Seminar Handout
The landmark tax reform legislation that took effect Jan. 1 created significant changes in the tax code that will affect the housing industry and our small business members.
To help NAHB members understand how these changes could impact their business, NAHB is hosting a members-only webinar, Tax Reform and Your Bottom Line, at 1 p.m. ET on March 5.
The webinar will feature NAHB tax experts and outside tax counsel who will focus on the specific changes that will most directly impact small businesses, including the 20% pass-through deduction, limitations on the business interest deduction and new depreciation guidelines. Register for the March 5 webinar at nahb.org/taxwebinar (log-in required). If you are not able to join the webinar, a replay will be posted on nahb.org. You can learn more about the new tax law, and NAHB’s influence during the legislative process, at nahb.org/taxreform.
On December 20, Congress finally sent H.R. 1, the Tax Cuts and Jobs Act, to the President’s desk for signature.
After significant improvements made during the legislative process, and due to the robust engagement efforts of NAHB and its membership, NAHB issued our support for the final tax bill.
Changes to the tax code will take effect for the tax year starting January 1, 2018, and include the following provisions of note to NAHB’s membership:
· Mortgage interest deduction. Retains the mortgage interest deduction and the deduction for second homes, but reduces the mortgage interest cap from $1 million to $750,000.
· State and local property taxes. Allows taxpayers to deduct up to $10,000 of state and local taxes, including property taxes and the choice of income or sales taxes.
· Capital gains exclusion. Maintains existing law that allows home owners to exclude up to $250,000 (or $500,000 for married couples) in capital gains on the profit from the sale of a home if they have lived in the house for two of the last five years.
· HELOC. Eliminates the deduction for interest on home equity loans.
· Private activity bonds. Retains private activity bonds (PABs), which will enable the Low Income Housing Tax Credit to maintain its effectiveness as the most indispensable tool for the production of affordable housing. Without PABs, we would face the loss of more than 788,000 affordable rental units over the next decade.
· Alternative Minimum Tax. Eliminates the Alternative Minimum Tax (AMT) for corporations and increases the AMT exemption amounts and phase-out thresholds for individuals.
· Individual tax brackets. Retains seven tax brackets, with rates ranging from 10% to 37%. This will provide tax relief for individuals and small businesses and represents a tax cut for most taxpayers.
· Estate tax. Doubles the estate tax exemption.
· Carried interest. Retains existing carried interest rules, but assets must be held for three years.
· Pass-through deduction. Allows most taxpayers with pass-through income to deduct 20% of that income based on wages or on wages plus a capital element.
· Business interest deduction. Provides the taxpayer a choice of making a one-time election for a deduction limited to 30% of adjusted gross income; or for real estate, a 100% deduction for business interest, but with certain tradeoffs.
· Like-kind exchanges. Preserves the benefit for real estate investors to make tax-free exchanges of property, commonly referred to as “like-kind” exchanges.
· Multifamily depreciation. Gives the taxpayer the choice of taking 27.5- or 30-year depreciation, depending on how they elect to treat their business interest.
· Individual tax provision sunsets. Almost all individual tax elements – mortgage interest, state and local property taxes, individual brackets, etc. – expire at the end of 2025. Unless Congress acts, starting in 2026 these modifications will revert back to the tax code as it exists today in 2017.
President Trump today signed into law landmark tax reform legislation.
“NAHB commends President Trump and members of Congress for their hard work and dedication in crafting this once-in-a-generation overhaul of the nation’s tax code,” said NAHB Chairman Granger MacDonald. “Providing tax relief for hard-working families and creating a more favorable tax climate for small business will make the economy more vibrant and competitive. In turn, this will boost the housing sector, which represents roughly one-sixth of the U.S. economy. Housing not only equals jobs, but jobs mean more demand for housing.”
Throughout the tax reform debate, NAHB and our grassroots were at the forefront of the legislative process. We held several meetings with House Ways and Means Committee Chairman Kevin Brady, along with other committee members and staff, while builders engaged with key House and Senate lawmakers in their home districts and at their offices on Capitol Hill.
Thanks to the efforts of the entire Federation, NAHB achieved significant victories on the real estate exception to the business interest deduction, second homes, private activity bonds, the capital exclusion, and many other provisions.
Under the new law, the majority of taxpayers will receive a tax cut, including working class home owners and renters, small business owners and our members who are engaged in all aspects of the residential construction sector. Lower tax rates will spur job and economic growth, and that is good for housing.
An overview of the Tax Cuts and Jobs Act, with all changes taking effect for the tax year starting Jan. 1, 2018:
Last week we had the opportunity to present a few brief comments to a Sussex County Planning and Zoning Commission public hearing, as they work thru their Comprehensive Plan update.
The current draft plan, available at the website www.sussexplan.com., will be the overall planning tool as they move forward with future land use and growth goals for Sussex County.
In one chapter of their draft plan, they echoed the use of density bonuses for developers, in exchange for voluntary preservation of natural resources, especially in Environmentally Sensitive Developing Areas. Though our comments were not confined to these specific areas, we forwarded earlier this year our policy statement to recommend increased density for property owners for the protection of natural resources. Glad to see they saw merit to our ideas.
We also subsequently submitted the recent study that demonstrates how each new home built in Delaware produces 4.25 permanent new jobs in Delaware.
We also noted to Sussex County that our National Association of Home Builders will review the current draft comprehensive plan and offer comments and suggestions.
Last week our HBADE President Jim McCulley appeared before the EPA in Washington D.C. and testified along with our National Association of Home Builders. Although there were other groups present at this meeting, only two representatives from NAHB were permitted to attend – the NAHB staffer and Jim.
The topic of discussion was Waters of the United States (WOTUS). The current administration issued Executive Order to rescind the previous Administration proposed rules and to solicit comments a write a new rule that would be more balanced and reflecting the intent of the Congress and Supreme Court. As such, EPA and ACOE are holding a series of listening sessions and asking for comments from different sectors. As Jim is one of a handful of Professional Wetlands Scientists, he is eminently qualified to present fair, balanced comments that protect our waters while not unreasonably stifling or regulating land development and home building
Additionally, NAHB has been asked to propose a framework for the new rule for consideration and Jim is assisting NAHB Staff with that