HF2323 is a measure intended to address the state’s looming budget shortfall. It seeks to reduce spending and raise taxes in order to balance the budget.
But guess where that tax revenue is going to come from?
Your property and more directly, your wallet.
The House Tax Plan raises revenue by eliminating three major real estate tax deductions: the Mortgage Interest Deduction (MID), Real Estate Property Taxes and the Relative Homestead Tax.
For decades, home and duplex owners have been able to deduct a sizable amount from their income taxes due to the interest paid on their mortgages. The House Bill replaces this deduction with a maximum “housing credit” of $420, or 7 percent of up to $6000 in mortgage interest paid. However, no credit is applied to the first $4000 of interest paid.
As a result, a property owner must pay $10,000 in mortgage interest to qualify for the full $420 credit.
Dumb enough? Wait. It gets better.
Since 1933, the tax code has allowed taxpayers to deduct property taxes from their income. HF2323 eliminates the deductibility of property taxes.
Finally,Lenczewski says in an effort to thwart parents from buying homes for their college students, the bill contains a provision eliminating an owner’s ability to qualify for homestead property taxes when a relative resides there.
Personally, I didn’t know buying houses for your kids to live in while in school was such a nuisance. (Yes, I’m being sarcastic. )
Of course, none of this will help stimulate a housing recovery in the state. In fact, it’s likely it will only prolong the crisis.
Contact your representative and let them know how you feel.