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REALTORS® Speak, Legislature Listened

50% increase in State Deed Tax laid on table by Author

New tax would have added $123 million to cost of selling real estate

On Tuesday, March 28th, your Minnesota REALTORS® emailed out a "Call-For-Action" informing members of a legislative proposals to increase the Deed Tax by over 50%. As written the bill would have increased taxes on a $200,000 transaction to $1,368 on a transaction with 20 percent down. The tax would be even higher if the home buyer did not have 20 percent down.

Over 4,000 members created in excess of 10,000 contacts at the Minnesota Legislature. House and Senate emails were flooded by REALTOR® requests to stop the legislation. Thanks to the Representative Morrie Lanning (R-Moorhead) the legislation was pulled and will not be considered in 2006. In discussing the issue with Representative Lanning, Minnesota REALTOR® staff agreed to meet with HRA officials to look at the issue and possible resolutions.

To: Honorable Members of the Minnesota House and Senate
From: Glenn Dorfman 612/719-6541 gsdorfman@mnrealtor.com
Susan Dioury 612/810-2911 sdioury@mnrealtor.com
Re: HF 3912-Lanning / SF 3516-Cohen:
Dedicated Fund for Housing Programs - Deed Tax
Date: March 29, 2005

The Minnesota Association of REALTORS® respectfully asks you to OPPOSE HF 3912 / SF 3516 which seeks to increase the deed tax by 50% and dedicate the money to a plethora of affordable housing programs.

Reasons to oppose this legislation:

This legislation would increase the cost of housing making it LESS AFFORDABLE for the public. 40% of the home buying public is first time home buyers. If we do not have first time home buyers, then we do not have move up home buyers. All of which affects housing values and the individual net worth of your constituents.
This tax increase would come at a time of rising interest rates and a saturated buyer market.
This proposal would increase the deed tax from $660 to a $1,000 tax on a $200,000 property.

The majority of properties include a mortgage. Therefore, if this property included a $160,000 mortgage there would be an additional $368 mortgage registry tax creating a total mortgage registry and deed tax of $1,368 on a $200,000 property.

This proposal would provide affordable housing assistance to families with incomes over $68,000 for Minnesota and incomes over $74,000 in the metro area (115% of median family income.) Hardly a definition of low-income!
We have discussed this proposal with proponents for the last many years and we have requested documentation of need from them. Additionally, we have requested documentation on current income from all sources including federal, state, local and private providers for purposes of understanding the cost of meeting the affordable housing target they seek.

MN currently has the highest homeownership rate in the nation at 78% with rising foreclosure rates.
The rental market is softening.

The MN Association of REALTORS® has, over the years, supported:

The interest from real estate trust accounts submitted to the MHFA for affordable housing initiatives.
The MN Association of REALTORS® is the second largest contributor to the MHFA/Fannie Mae/Federal Reserve Emerging Markets Homeownership Initiative

Please oppose HF 3916/SF 3516. Thank you for your consideration.

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Eminent Domain Bill Passes Senate

Legislation would significantly restrict the use of Eminent Domain in Minnesota

Bills authored by Representative Jeff Johnson ® and Senator Tom Bakk (DFL) are moving forward in the legislature and appear to have a good chance to pass in 2006. Last week, SF2750 passed the Senate and is now awaiting House action before moving to Governor Pawlenty's desk.

If you are not familiar with Eminent Domain it is an action used by government to take private property for public use. The Fifth Amendment of the U.S. Constitution, "Takings Clause" states that private property cannot be taken for "public use" without "just compensation."

Impact of Income Taxes on Low-Income Families in 2005

With Tax Day quickly approaching, a report produced by the Center on Budget and Policy Priorities might help you as you prepare your returns. With slightly more than 25,000 members and roughly 85,000 housing transactions (170,000 sides) in the state, the average member participates in about 7 transactions annually. That means many may fall into categories that provide them with tax relief come April 15th.

Seven states do not levy an income tax against their residents (Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming). That leaves 42 states that do levy an income tax against their resident's income. Of those charging residents an income tax, twelve states do not tax poor families and instead offer them tax credits that provide refunds to families with income at the poverty line. These income tax credits act as a wage supplement and income support, helping poor families' work efforts and reduce poverty.

Quick Summaries of Legislative Actions Available Online

Both the House and Senate publish weekly recaps of legislative activities

If you're wondering just what the legislature does from week-to-week, two publications can provide you with a quick and easy to read review. The House of Representatives publishes the "Session Weekly" a glossy well written and interesting publication that reviews committee hearings, bill introductions and interesting facts and Tid Bits about Minnesota. You can get a copy and sign-up for the publication at: www.house.leg.state.mn.us.

Similarly, the Senate produces a weekly review called the Senate Breifly. Although not as flashy as the House publication, it does provide a good overview of actions in the Senate. You can access the Senate Briefly at: www.senate.leg.state.mn.us

This newsletter was sent to [email address suppressed] at your request as a member of the Minnesota Association of REALTORS®. If you no longer wish to receive these emails, you may unlist yourself immediately. You may also unsubscribe via postal mail by writing to Minnesota Association of REALTORS®, 5750 Lincoln Drive, Edina, MN 55436. Be sure to include your email address.