Yesterday, the Minnesota House of Representatives Tax Committee released a “delete all amendment” to HF2323 and added provisions that are negative for real estate owners in the Omnibus Tax Bill. Authored by DFL Representative Ann Lenczewski, it contains a number of tax law modifications that hurt all Minnesota home owners.
The Minnesota legislature and many other state governments find themselves in a situation familiar to many Minnesota households–their expenses have outpaced their revenue. The DFL House Tax Plan raises revenue by cutting a number of income tax deductions. Of significant concern to Minnesota homeowners this house plan eliminates two major real estate tax deductions: the Mortgage Interest Deduction and Real Estate Property Taxes. The bill also eliminates provisions of the Relative Homestead Tax.
The Mortgage Interest Deduction has been a feature of the tax code since 1933 and has helped numerous generations achieve the American Dream of owning a home. This new provision hurts young families disproportionately because mortgage debt loads are highest when people are establishing their households. This provision changes the financial plans numerous families have made when purchasing a home and increases the financial difficulties many are facing during this economic downturn. At a time when housing is finally getting a financial foothold why eliminate a tax provision that has helped so many Minnesota home buyers and home owners?
The Real Estate Property Tax Deductibility policy provision has also been included in the tax code since 1933 and allows the tax payers to deduct property taxes paid from their income. The House DFL Tax Bill eliminates the deductibility of real estate property taxes at a time when local property taxes continue to increase faster than Minnesotans’ income.
Relative Homestead-if you own identical houses, with identical values, with identical tax rates you would assume you would pay identical taxes–right? Not if this Tax Bill becomes law! In aprovision of the bill, families that provide housing to other family members will pay more taxes on the second home! The goal of the provision, as stated by the legislator, is to stop parents from buying homes for their college students. This is a small piece of the overall program and instead the proposal will be hurting families trying to assist other family members who may have gone through job loss, divorce or other financial difficulties. Isn’t it better to have families provide for families instead of government?
These provisions have been designed, according to the author, to make the Minnesota tax system “more progressive” and to raise revenue to fill the state’s pending budget shortfall. At a time when housing market is beginning to stabilize here, this DFL sponsored proposal sends the wrong message to struggling Minnesota households.
Let your Representative know that it is time for our elected officials to “Live Within Your Means” by prioritizing spending and not raising taxes.
If you would like additional information on this proposed biil and on how to contact your Representative click here.
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