HB1512 (2018) Detail

Relative to taxes applicable to certain transfers of real property.


HB 1512-FN-A - AS INTRODUCED

 

 

2018 SESSION

18-2411

10/08

 

HOUSE BILL 1512-FN-A

 

AN ACT relative to taxes applicable to certain transfers of real property.

 

SPONSORS: Rep. Williams, Hills. 4; Rep. Hansen, Hills. 22; Sen. Daniels, Dist 11; Rep. Chandley, Hills. 22

 

COMMITTEE: Ways and Means

 

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ANALYSIS

 

This bill modifies the application of the business profits tax and the real estate transfer tax to the ownership, taxation, and transfer of investment interests in a real estate investment trust and certain limited partnerships.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

18-2411

10/08

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Eighteen

 

AN ACT relative to taxes applicable to certain transfers of real property.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  New Paragraph; Business Profits Tax; Deduction for Dividends.  Amend RSA 77-A:4 by inserting after paragraph XVIII the following new paragraph:

XIX.  In the case of a business organization that is a real estate investment trust as defined in section 856 of the United States Internal Revenue Code a deduction of such amount of gross business profits as is attributable to dividends  paid out to its investors which are taxable as dividends under RSA 77:4, V.

2  Real Estate Transfer Tax; Real Estate Investment Trusts.  Amend RSA 78-B:1-a, V and VI to read as follows:

V.  "Sale, granting and transfer'' means every contractual transfer of real estate, or any interest in real estate from a person or entity to another person or entity, whether or not either person or entity is controlled directly or indirectly by the other person or entity in the transfer.  Transfers of interests in real estate holding companies, except for a real estate investment trust as defined in section 856 of the United States Internal Revenue Code, holding real estate or holding interests in real estate, transfer of which would be taxable under this chapter if transferred directly, shall be taxable as transfers under this chapter to the extent of the fair market value of the real estate.  No transfer of shares of ownership interests in a real estate investment trust as defined in section 856 of the United States Internal Revenue Code shall be taxable as transfers under this chapter.  Transfers of interests in an entity that holds, either directly or indirectly, an interest in a real estate holding company shall be considered to be a transfer of an interest in the real estate holding company to the extent of the ownership interest of the entity in the real estate holding company.

VI.  "Real estate holding company'' means an organization which is engaged principally in owning, holding, selling, or leasing real estate and which owns real estate or an interest in real estate within the state, but which is not a real estate investment trust as defined in section 856 of the United States Internal Revenue Code.

3  New Paragraphs; Real Estate Transfer Tax; Exceptions Added.  Amend RSA 78-B:2 by inserting after paragraph XXII the following new paragraphs:

XXIII.  To a transfer of shares of ownership interests in a real estate investment trust as defined in section 856 of the United States Internal Revenue Code relative to a transfer of a specific real property after payment of the tax for the acquisition of such real property.

XXIV.  To a change in a limited partner of a federal low-income housing tax credit limited partnership for the transfer of affordable housing having an award of federal low-income housing credits.

4  Conveyances of Real Estate; Trusts.  Amend RSA 477:25 to read as follows:

477:25  Statute of Uses Not to Effect Trusts.  When a conveyance or devise of real estate is made to a grantee or devisee in trust or as trustee under a declaration of trust, except to a real estate investment trust as defined in section 856 of the United States Internal Revenue Code, such conveyance or devise shall vest in the grantee or devisee, as trustee, legal title with full power to convey the real estate in accordance with the trust.

5 Conveyances of Real Property; Trusts.  Amend RSA 477:25-a, IV to read as follows:

IV.  This section shall not apply to any trust that, as determined by the laws of its situs, is an entity capable of holding and conveying title in its own name. This section shall not apply to a real estate investment trust as defined in section 856 of the United States Internal Revenue Code.

6  Effective Date.  This act shall take effect July 1, 2018.

 

LBAO

18-2411

11/2/17

 

HB 1512-FN-A- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to taxes applicable to certain transfers of real property.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2019

FY 2020

FY 2021

FY 2022

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable Decrease

Indeterminable Decrease

Indeterminable Decrease

Indeterminable Decrease

   Expenditures

$0

$0

$0

$0

Funding Source:

  [ X ] General            [ X ] Education            [   ] Highway           [    ] Other

 

METHODOLOGY:

This bill amends the Business Profits Tax statute to provide an exemption from gross business profits for dividends paid to investors of real estate investment trusts.  The bill also amends the definition of "sale, granting and transfer" and "real estate holding company" so a real estate investment trust will not be considered a real estate holding company.  This change would result in a real estate investment trust being taxed when the ownership is transferred.  Additionally, this bill also amends the Real Estate Transfer Tax statute to create two new exceptions to the tax.  The first would apply to the transfer of shares of ownership interest in a real estate investment trust and the second exception would apply to the change in a limited partner of a federal low-income housing tax credit limited partnership for the transfer of affordable housing that has been awarded a federal low-income housing credit.  The Department does not collect or capture the data necessary to determine the exact fiscal impact of this bill.  However, the creation of new exceptions and exemptions from the Business Profits Tax and the Real Estate Transfer Tax will decrease State General Fund and Education Trust Fund revenue by an indeterminable amount in FY 2019 and each year thereafter.

 

The Department would be able to absorb any costs associated with the proposed changes contained in this bill.

 

AGENCIES CONTACTED:

Department of Revenue Administration

 

Links

HB1512 at GenCourtMobile

Action Dates

Date Body Type
Jan. 16, 2018 House Hearing
Feb. 21, 2018 House Exec Session

Bill Text Revisions

HB1512 Revision: 2078 Date: Nov. 6, 2017, 7:55 a.m.

Docket

Date Status
Jan. 3, 2018 Introduced 01/03/2018 and referred to Ways and Means HJ 1 P. 13
Jan. 16, 2018 Public Hearing: 01/16/2018 01:00 PM LOB 202
Jan. 24, 2018 Full Committee Work Session: 01/24/2018 11:00 AM LOB 202
Jan. 31, 2018 Subcommittee Work Session: 01/31/2018 10:00 AM LOB 202
Feb. 6, 2018 Full Committee Work Session: 02/06/2018 10:30 AM LOB 202
Feb. 13, 2018 Subcommittee Work Session: 02/13/2018 09:00 AM LOB 104
Feb. 21, 2018 Executive Session: 02/21/2018 LOB 202
Committee Report: Refer for Interim Study (Vote 21-0; CC)
March 6, 2018 Committee Report: Refer for Interim Study for 03/06/2018 (Vote 21-0; CC) HC 9 P. 34
March 6, 2018 Refer for Interim Study: MA VV 03/06/2018 HJ 6 P. 60