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 Ways and Means (successor To Hsb 557) Committee
Topics:Housing & propertyTaxes
Where it is now
- Done: IntroducedJanuary 29, 2024
- Done: SubcommitteeFebruary 8, 2024
- Done: House committeeFebruary 28, 2024
- Done: Passes the HouseMarch 26, 202495–0
- Stopped: Senate committeeDied when the General Assembly ended
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Died when the session ended The 2024 session adjourned on April 19, 2024, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?
What’s in it
AI summary Iowa currently limits the amount of money from real estate transfer taxes that goes into the housing trust fund to $7 million each year. This bill removes that limit so more money can be used to build and protect affordable housing for people with low incomes.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 percent to the state general fund, percent to the HTF, and 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.
Senate subcommittee
Named April 2, 2024. It hasn’t reported yet.
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 2029.3
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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