Maryland 2023 Regular Session

Maryland House Bill HB211 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb0211
6	6
7	7	HOUSE BILL 211
8	8	C9, Q3, Q6 3lr0471
9	9
10	10	By: Delegates Palakovich Carr, Lehman, Charkoudian, Ebersole, Fair, Feldmark,
11	11	Grossman, R. Lewis, J. Long, Lopez, Moon, Ruth, Smith, Stewart, Taveras,
12	12	Terrasa, Washington, Wells, and Wilkins
13	13	Introduced and read first time: January 20, 2023
14	14	Assigned to: Ways and Means
15	15
16	16	A BILL ENTITLED
17	17
18	18	AN ACT concerning 1
19	19
20	20	Rental Housing Fund, Calculation of Taxable Income, and Transfer Tax – 2
21	21	Alterations 3
22	22	(Affordable Housing Investment Act) 4
23	23
24	24	FOR the purpose of requiring the Governor to include in the annual budget bill an 5
25	25	appropriation to the Rental Housing Fund; requiring certain taxpayers to add a 6
26	26	certain deduction for capital gains excluded under the federal Qualified Opportunity 7
27	27	Zones program back to federal adjusted gross income to determine Maryland taxable 8
28	28	income; altering the rate of the transfer tax imposed on residential real property to 9
29	29	be used as a principal residence by a first–time home buyer; requiring taxpayers who 10
30	30	itemize deductions on a State income tax return to reduce the amount of the 11
31	31	deductions by the amount of certain interest paid or accrued during the taxable year; 12
32	32	and generally relating to the Rental Housing Fund, the Maryland income tax, and 13
33	33	the State transfer tax on real property. 14
34	34
35	35	BY repealing and reenacting, with amendments, 15
36	36	Article – Housing and Community Development 16
37	37	Section 4–504 17
38	38	Annotated Code of Maryland 18
39	39	(2019 Replacement Volume and 2022 Supplement) 19
40	40
41	41	BY repealing and reenacting, without amendments, 20
42	42	Article – Tax – General 21
43	43	Section 10–204(a) and 10–305(a) 22
44	44	Annotated Code of Maryland 23
45	45	(2022 Replacement Volume) 24
46	46
47	47	BY adding to 25
48	48	Article – Tax – General 26 2 HOUSE BILL 211
49	49
50	50
51	51	Section 10–204(m) 1
52	52	Annotated Code of Maryland 2
53	53	(2022 Replacement Volume) 3
54	54
55	55	BY repealing and reenacting, with amendments, 4
56	56	Article – Tax – General 5
57	57	Section 10–218 and 10–305(d) 6
58	58	Annotated Code of Maryland 7
59	59	(2022 Replacement Volume) 8
60	60
61	61	BY repealing and reenacting, with amendments, 9
62	62	Article – Real Property 10
63	63	Section 14–104 11
64	64	Annotated Code of Maryland 12
65	65	(2015 Replacement Volume and 2022 Supplement) 13
66	66
67	67	BY repealing and reenacting, with amendments, 14
68	68	Article – Tax – Property 15
69	69	Section 13–203 16
70	70	Annotated Code of Maryland 17
71	71	(2019 Replacement Volume and 2022 Supplement) 18
72	72
73	73	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
74	74	That the Laws of Maryland read as follows: 20
75	75
76	76	Article – Housing and Community Development 21
77	77
78	78	4–504. 22
79	79
80	80	(a) In this section, “Fund” means the Rental Housing Fund. 23
81	81
82	82	(b) There is a Rental Housing Fund. 24
83	83
84	84	(c) The Department shall use the Fund to operate, make loans, and pay expenses 25
85	85	of the Rental Housing Program, including reserves for anticipated future losses directly 26
86	86	related to the Rental Housing Program, as provided in the State budget. 27
87	87
88	88	(d) The Department shall administer the Fund either directly or through the 28
89	89	Administration. 29
90	90
91	91	(e) The Fund consists of: 30
92	92
93	93	(1) money appropriated by the State for the Rental Housing Program under 31
94	94	§ 4–402 of this title; 32
95	95
96	96	(2) repayments and prepayments of loans made under the Rental Housing 33
97	97	Program and from loan programs under this title that have been repealed; 34 HOUSE BILL 211 3
98	98
99	99
100	100
101	101	(3) money appropriated under § 4–501(c) of this subtitle; 1
102	102
103	103	(4) money transferred to the Fund in accordance with §§ 4 –502(e), 2
104	104	4–503(d), and 4–505(h) of this subtitle and § 3–203(i) of this article; 3
105	105
106	106	(5) funds received by the Department or the Administration from the 4
107	107	federal government or other public or private sources; 5
108	108
109	109	(6) investment earnings of the Fund; [and] 6
110	110
111	111	(7) revenue distributed to the Fund under § 2–605.2 of the Tax – General 7
112	112	Article; AND 8
113	113
114	114	(8) MONEY APPROPRIATED I N THE STATE BUDGET TO THE FUND. 9
115	115
116	116	(f) (1) When the Department issues a binding commitment to make a loan, 10
117	117	the Department shall withdraw from the Fund an amount equal to the commitment. 11
118	118
119	119	(2) Subject to § 7–209 of the State Finance and Procurement Article and 12
120	120	except as otherwise provided in the State budget, after the first 8 months of a fiscal year 13
121	121	the Department may transfer unencumbered money in the Fund to any other fund 14
122	122	established under this title. 15
123	123
124	124	(G) (1) FOR FISCAL YEAR 2025 AND EACH FISCAL YEAR THEREAFTER , 16
125	125	THE GOVERNOR SHALL INCLUD E IN THE ANNUAL BUDG ET BILL AN APPROPRIA TION 17
126	126	OF $20,000,000 TO THE FUND. 18
127	127
128	128	(2) FUNDS PROVIDED UNDER THIS SUBSECTION SHALL BE 19
129	129	SUPPLEMENTAL TO , AND MAY NOT SUPPL ANT, FUNDS OTHERWISE APPROPRIATED 20
130	130	TO THE FUND. 21
131	131
132	132	SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 22
133	133	as follows: 23
134	134
135	135	Article – Tax – General 24
136	136
137	137	10–204. 25
138	138
139	139	(a) To the extent excluded from federal adjusted gross income, the amounts under 26
140	140	this section are added to the federal adjusted gross income of a resident to determine 27
141	141	Maryland adjusted gross income. 28
142	142
143	143	(M) THE ADDITION UNDER SU BSECTION (A) OF THIS SECTION INCL UDES ANY 29
144	144	CAPITAL GAINS EXCLUD ED UNDER § 1400Z–2 OF THE INTERNAL REVENUE CODE. 30
145	145	4 HOUSE BILL 211
146	146
147	147
148	148	10–305. 1
149	149
150	150	(a) To the extent excluded from federal taxable income, the amounts under this 2
151	151	section are added to the federal taxable income of a corporation to determine Maryland 3
152	152	modified income. 4
153	153
154	154	(d) The addition under subsection (a) of this section includes the additions 5
155	155	required for an individual under: 6
156	156
157	157	(1) § 10–204(b) of this title (Dividends and interest from another state or 7
158	158	local obligation); 8
159	159
160	160	(2) § 10–204(c)(2) of this title (Federal tax–exempt income); 9
161	161
162	162	(3) § 10–204(e) of this title (Oil percentage depletion allowance); 10
163	163
164	164	(4) § 10–204(i) of this title (Deduction for qualified production activities 11
165	165	income); 12
166	166
167	167	(5) § 10–204(j) of this title (Deduction for costs for security clearance 13
168	168	administrative expenses and construction and equipment costs incurred to construct or 14
169	169	renovate a sensitive compartmented information facility); [and] 15
170	170
171	171	(6) § 10–204(l) of this title (Deduction for donations to qualified permanent 16
172	172	endowment funds); AND 17
173	173
174	174	(7) § 10–204(M) OF THIS TITLE (CAPITAL GAINS EXCLUDE D FOR 18
175	175	INVESTMENT IN OPPORTUNITY ZONE ). 19
176	176
177	177	SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 20
178	178	as follows: 21
179	179
180	180	Article – Real Property 22
181	181
182	182	14–104. 23
183	183
184	184	(a) In this section, “first–time Maryland home buyer” means an individual who 24
185	185	has never owned in the State residential real property that has been the individual’s 25
186	186	principal residence. 26
187	187
188	188	(b) Except as provided in subsection (c) of this section, in every written or oral 27
189	189	agreement for the sale or other disposition of property, it is presumed in the absence of a 28
190	190	contrary provision in the agreement or the law, that the parties to the agreement intended 29
191	191	that the cost of any recordation tax or any State or local transfer tax shall be shared equally 30
192	192	between the grantor and grantee. This section does not apply to mortgages or deeds of trust. 31
193	193	HOUSE BILL 211 5
194	194
195	195
196	196	(c) (1) The entire amount of recordation tax and local transfer tax shall be paid 1
197	197	by the seller of improved, residential real property that is sold to a first–time Maryland 2
198	198	home buyer who will occupy the property as a principal residence, unless there is an express 3
199	199	agreement between the parties to the agreement that the recordation tax and local transfer 4
200	200	tax will not be paid entirely by the seller. 5
201	201
202	202	(2) [The] EXCEPT AS PROVIDED IN § 13–203 OF THE TAX – PROPERTY 6
203	203	ARTICLE, THE entire amount of State transfer tax shall be paid by the seller of improved, 7
204	204	residential real property that is sold to a first–time Maryland home buyer who will occupy 8
205	205	the property as a principal residence. 9
206	206
207	207	(3) This subsection does not apply to tax sales of property under Title 14, 10
208	208	Subtitle 8 of the Tax – Property Article. 11
209	209
210	210	(4) If there are two or more grantees, this subsection does not apply unless 12
211	211	each grantee is a first–time Maryland home buyer or a co–maker or guarantor of a purchase 13
212	212	money mortgage or purchase money deed of trust as defined in § 12–108(i) of the Tax – 14
213	213	Property Article for the property and the co–maker or guarantor will not occupy the 15
214	214	residence as the co–maker’s or guarantor’s principal residence. 16
215	215
216	216	(5) Paragraphs (1) and (2) of this subsection apply only if each grantee or 17
217	217	an agent of the grantee provides a statement that is signed under oath by the grantee or 18
218	218	agent of the grantee stating that: 19
219	219
220	220	(i) 1. The grantee is a first–time Maryland home buyer as 20
221	221	defined under subsection (a) of this section; and 21
222	222
223	223	2. The residence will be occupied by the grantee as the 22
224	224	grantee’s principal residence; or 23
225	225
226	226	(ii) 1. The grantee is a co–maker or guarantor of a purchase 24
227	227	money mortgage or purchase money deed of trust as defined in § 12–108(i) of the Tax – 25
228	228	Property Article for the property; and 26
229	229
230	230	2. The grantee will not occupy the residence as the 27
231	231	co–maker’s or guarantor’s principal residence. 28
232	232
233	233	(6) A statement under paragraph (5) of this subsection by an agent of a 29
234	234	grantee shall state that the statement: 30
235	235
236	236	(i) Is based on a diligent inquiry made by the agent with respect to 31
237	237	the facts set forth in the statement; and 32
238	238
239	239	(ii) Is true to the best of the knowledge, information, and belief of the 33
240	240	agent. 34
241	241
242	242	Article – Tax – Property 35 6 HOUSE BILL 211
243	243
244	244
245	245
246	246	13–203. 1
247	247
248	248	(a) (1) Except as provided in subsections (a–1) and (b) of this section, the rate 2
249	249	of the transfer tax is 0.5% of the consideration payable for the instrument of writing. 3
250	250
251	251	(2) The consideration: 4
252	252
253	253	(i) includes the amount of any mortgage or deed of trust assumed 5
254	254	by the grantee; and 6
255	255
256	256	(ii) subject to item (i) of this paragraph, includes only the amount 7
257	257	paid or delivered in return for the sale of the property and does not include the amount of 8
258	258	any debt forgiven or no longer secured by a mortgage or deed of trust on the property. 9
259	259
260	260	(a–1) (1) Except as provided in subsection (b) of this section, the rate of the 10
261	261	transfer tax is 0.5% of the consideration paid for the transfer of a controlling interest in a 11
262	262	real property entity as defined in § 13–103 of this title that has developed real property 12
263	263	under Section 42 of the Internal Revenue Code, the Low Income Housing Tax Credit 13
264	264	Program. 14
265	265
266	266	(2) The consideration under this subsection shall be the actual payment 15
267	267	made by the purchaser to the seller for the purchase of the interest. 16
268	268
269	269	(b) (1) In this subsection, “first–time Maryland home buyer” means an 17
270	270	individual who has never owned in the State residential real property that has been the 18
271	271	individual’s principal residence. 19
272	272
273	273	(2) If there are two or more grantees, this subsection does not apply unless 20
274	274	each grantee is a first–time Maryland home buyer or a co–maker or guarantor of a purchase 21
275	275	money mortgage or purchase money deed of trust as defined in § 12–108(i) of this article 22
276	276	for the property and the co–maker or guarantor will not occupy the residence as the 23
277	277	co–maker’s or guarantor’s principal residence. 24
278	278
279	279	(3) Notwithstanding any other provision of law, for a sale of improved 25
280	280	residential real property to a first–time Maryland home buyer who will occupy the property 26
281	281	as a principal residence, [the rate of the transfer tax is 0.25% of the consideration payable 27
282	282	for the instrument of writing and the transfer tax shall be paid entirely by the seller] THE 28
283	283	RATE OF THE TRANSFER TAX IS ON THE CONSIDERATI ON PAYABLE FOR THE 29
284	284	INSTRUMENT OF WRITIN G AS FOLLOWS: 30
285	285
286	286	(I) 0.25% ON THE CONSIDERATIO N OF UP TO $1,000,000 TO BE 31
287	287	PAID ENTIRELY BY THE SELLER; AND 32
288	288	HOUSE BILL 211 7
289	289
290	290
291	291	(II) 0.5% ON THE CONSIDERATION IN EXCESS OF $1,000,000 TO 1
292	292	BE PAID EQUALLY BETWEEN THE BUYER AND THE SELLER, UNLESS THERE IS AN 2
293	293	EXPRESS AGREEMENT BE TWEEN THE BUYER AND THE SELLER TO THE CONTRARY . 3
294	294
295	295	(4) To qualify for the exemption under paragraph (3) of this subsection, 4
296	296	each grantee or an agent of the grantee shall provide a statement that is signed under oath 5
297	297	by the grantee or agent of the grantee stating that: 6
298	298
299	299	(i) 1. the grantee is an individual who has never owned in the 7
300	300	State residential real property that has been the individual’s principal residence; and 8
301	301
302	302	2. the residence will be occupied by the grantee as the 9
303	303	grantee’s principal residence; or 10
304	304
305	305	(ii) 1. the grantee is a co–maker or guarantor of a purchase 11
306	306	money mortgage or purchase money deed of trust as defined in § 12–108(i) of this article 12
307	307	for the property; and 13
308	308
309	309	2. the grantee will not occupy the residence as the 14
310	310	co–maker’s or guarantor’s principal residence. 15
311	311
312	312	(5) A statement under paragraph (4) of this subsection by an agent of a 16
313	313	grantee shall state that the statement: 17
314	314
315	315	(i) is based on a diligent inquiry made by the agent with respect to 18
316	316	the facts set forth in the statement; and 19
317	317
318	318	(ii) is true to the best of the knowledge, information, and belief of the 20
319	319	agent. 21
320	320
321	321	SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 22
322	322	as follows: 23
323	323
324	324	Article – Tax – General 24
325	325
326	326	10–218. 25
327	327
328	328	(a) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 26
329	329	INDICATED. 27
330	330
331	331	(2) “QUALIFIED RESIDENCE ” HAS THE MEANING STAT ED IN § 163 OF 28
332	332	THE INTERNAL REVENUE CODE. 29
333	333
334	334	(3) “QUALIFIED RESIDEN CE INTEREST” HAS THE MEANING STAT ED 30
335	335	IN § 163 OF THE INTERNAL REVENUE CODE. 31
336	336	8 HOUSE BILL 211
337	337
338	338
339	339	(B) Only an individual who itemizes deductions on the individual’s federal income 1
340	340	tax return may elect to itemize deductions on the individual’s income tax return. 2
341	341
342	342	[(b)] (C) An individual who elects to itemize deductions is allowed as a deduction 3
343	343	the sum of the individual’s federal itemized deductions: 4
344	344
345	345	(1) limited and reduced as required under the Internal Revenue Code; 5
346	346
347	347	(2) further reduced by any amount deducted under § 170 of the Internal 6
348	348	Revenue Code for contributions of a preservation or conservation easement for which a 7
349	349	credit is claimed under § 10–723 of this title; [and] 8
350	350
351	351	(3) further reduced by the amount claimed as taxes on income paid to a 9
352	352	state or political subdivision of a state, after subtracting a pro rata portion of the reduction 10
353	353	to itemized deductions required under § 68 of the Internal Revenue Code; AND 11
354	354
355	355	(4) FURTHER REDUCED BY ANY AMOUNT DEDUCTED FOR QUALIFIED 12
356	356	RESIDENCE INTEREST UNDER § 163 OF THE INTERNAL REVENUE CODE FOR ANY 13
357	357	QUALIFIED RESIDENCE THAT IS: 14
358	358
359	359	(I) NOT A PRINCIPAL RESIDENCE ; AND 15
360	360
361	361	(II) NOT LOCATED IN THE STATE. 16
362	362
363	363	SECTION 5. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 17
364	364	applicable to all taxable years beginning after December 31, 2022. 18
365	365
366	366	SECTION 6. AND BE IT FURTHER ENACTED, That Section 3 of this Act shall be 19
367	367	applicable to all instruments of writing recorded or filed on or after July 1, 2023. 20
368	368
369	369	SECTION 7. AND BE IT FURTHER ENACTED, Tha t Section 4 of this Act shall be 21
370	370	construed to apply only prospectively and may not be applied or interpreted to have any 22
371	371	effect on or application to any indebtedness incurred or refinanced before January 1, 2024. 23
372	372
373	373	SECTION 8. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall take 24
374	374	effect January 1, 2024, and shall be applicable to all taxable years beginning after 25
375	375	December 31, 2023. 26
376	376
377	377	SECTION 9. AND BE IT FURTHER ENACTED, That, except as provided in Section 27
378	378	8 of this Act, this Act shall take effect July 1, 2023. 28
379	379
380	380
381	381
382	382
383	383