Bills › 90th General Assembly
Removing the maximum annual amount of real estate transfer tax receipts that may be transferred into the housing trust fund
Sponsored by the House Economic Growth and Technology Committee
Topics:Housing & propertyTaxes
Where it is now
- Done: IntroducedJanuary 16, 2024
- Done: SubcommitteeJanuary 16, 2024
- Done: House committeeJanuary 24, 2024
- Skipped: Passes the HouseContinued as HF 2634
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 2634 → Its progress continues under the new number. Go to HF 2634 What’s a funnel?
What’s in it
AI summary Currently, there is a $7 million yearly limit on how much money from real estate transfer taxes can go into the housing trust fund. This bill removes that limit so more money can be used to build and protect affordable housing for low-income people.1
Read the official explanation
The housing trust fund (HTF) was established for the development and preservation of affordable housing for low-income people in the state and for the Iowa mortgage help initiative.25 percent of the RETT receipts in the county general fund. Of the RETT receipts transferred to DOR, DOR transfers 65 percent to the state general fund, 30 percent to the HTF, and 5 percent to the shelter assistance fund. Currently, DOR may deposit a maximum of $7 million of RETT receipts into the HTF per year. Any amounts over $7 million are deposited into the state general fund. This bill removes the $7 million annual maximum that may be deposited into the HTF.
Why it matters. Removing the annual cap on real estate transfer tax receipts will increase the amount of money available for the housing trust fund to develop and preserve affordable housing for low-income people. This change is estimated to decrease funding for the state's General Fund by $2.2 million in fiscal year 2025, $2.4 million in fiscal year 2026, $2.6 million in fiscal year 2027, $2.8 million in fiscal year 2028, and $2.9 million in fiscal year 2029.2
House subcommittee
Named February 8, 2024. On February 20, 2024 it recommended passage. Vote Total: 3-0.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary This bill removes the $7.0 million annual limit on how much money from the Real Estate Transfer Tax goes into the Housing Trust Fund. It is estimated that this change will increase funding for the Housing Trust Fund and decrease funding for the state's General Fund. The impact on the General Fund is estimated to be a decrease of $2.2 million in fiscal year 2025, $2.4 million in fiscal year 2026, $2.6 million in fiscal year 2027, $2.8 million in fiscal year 2028, and $2.9 million in fiscal year 2029.4
Read the fiscal note
Description
House File 2634 removes the $7.0 million cap on annual deposits from the Real Estate Transfer Tax to the Housing Trust Fund.
Background
The Real Estate Transfer Tax is imposed on the transfer of real estate in the State and is based on the assessed value of home sales. The tax is equal to $0.80 per $500 (or any fractional part of $500) of consideration paid as part of or a condition of the property transfer, with the first $500 being exempt. The tax is paid to the county. The county retains 17.25% of the tax revenue for deposit into the county general fund. The county remits the remaining 82.75% to the State. Under current law, the State portion of the tax is deposited as follows:
- 30.0% to the Housing Trust Fund, up to a limit of $7.0 million.
- 5.0% to the Shelter Assistance Fund.
- 65.0%, plus any Housing Trust Fund revenue in excess of the $7.0 million cap, to the State General Fund.
Moneys in the Housing Trust Fund are annually appropriated to the Iowa Finance Authority to be used for the development and preservation of affordable housing for low-income persons in the State and for the Iowa Mortgage Help Initiative. Figure 1 shows the historical distribution of the State’s share of the Real Estate Transfer Tax.
Figure 1 — Historical Distribution of Real Estate Transfer Tax Revenue (in Millions)
Assumptions
- The supply and demand of housing will remain constant.
- Future Real Estate Transfer Tax receipts will increase by 2.0% each year.
Fiscal Impact
House File 2634 eliminates the cap on the Housing Trust Fund so that 30.0% of the Real Estate Transfer Tax receipts would be deposited into the Housing Trust Fund, regardless of the amount. This is estimated to increase funding to the Housing Trust Fund and decrease funding to the General Fund by the amounts in Figure 2.FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Housing Trust Fund 3.0$ 3.0$ 3.0$ 3.0$ 7.0$ 7.0$ Shelter Assistance Fund 1.2 1.2 1.2 1.6 2.0 1.6 State General Fund 19.2 19.1 20.3 27.4 36.9 23.4 Total 23.4$ 23.3$ 24.5$ 32.0$ 45.9$ 32.0$ Figure 2 — Fiscal Impact of HF 2634 (in Millions)
Source
- Department of Revenue
- Real Estate Transfer Tax, Housing Trust Fund · March 1, 2024
- Real Estate Transfer Tax, Housing Trust Fund · February 1, 2024
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- HF 171 Removing the maximum annual amount of real estate transfer tax receipts that may be transf…91st General Assembly · Subcommittee recommends passageNearly identical
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