EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0211*
HOUSE BILL 211
C9, Q3, Q6 3lr0471
By: Delegates Palakovich Carr, Lehman, Charkoudian, Ebersole, Fair, Feldmark,
Grossman, R. Lewis, J. Long, Lopez, Moon, Ruth, Smith, Stewart, Taveras,
Terrasa, Washington, Wells, and Wilkins
Introduced and read first time: January 20, 2023
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Rental Housing Fund, Calculation of Taxable Income, and Transfer Tax – 2
Alterations 3
(Affordable Housing Investment Act) 4
FOR the purpose of requiring the Governor to include in the annual budget bill an 5
appropriation to the Rental Housing Fund; requiring certain taxpayers to add a 6
certain deduction for capital gains excluded under the federal Qualified Opportunity 7
Zones program back to federal adjusted gross income to determine Maryland taxable 8
income; altering the rate of the transfer tax imposed on residential real property to 9
be used as a principal residence by a first–time home buyer; requiring taxpayers who 10
itemize deductions on a State income tax return to reduce the amount of the 11
deductions by the amount of certain interest paid or accrued during the taxable year; 12
and generally relating to the Rental Housing Fund, the Maryland income tax, and 13
the State transfer tax on real property. 14
BY repealing and reenacting, with amendments, 15
Article – Housing and Community Development 16
Section 4–504 17
Annotated Code of Maryland 18
(2019 Replacement Volume and 2022 Supplement) 19
BY repealing and reenacting, without amendments, 20
Article – Tax – General 21
Section 10–204(a) and 10–305(a) 22
Annotated Code of Maryland 23
(2022 Replacement Volume) 24
BY adding to 25
Article – Tax – General 26 2 HOUSE BILL 211
Section 10–204(m) 1
Annotated Code of Maryland 2
(2022 Replacement Volume) 3
BY repealing and reenacting, with amendments, 4
Article – Tax – General 5
Section 10–218 and 10–305(d) 6
Annotated Code of Maryland 7
(2022 Replacement Volume) 8
BY repealing and reenacting, with amendments, 9
Article – Real Property 10
Section 14–104 11
Annotated Code of Maryland 12
(2015 Replacement Volume and 2022 Supplement) 13
BY repealing and reenacting, with amendments, 14
Article – Tax – Property 15
Section 13–203 16
Annotated Code of Maryland 17
(2019 Replacement Volume and 2022 Supplement) 18
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20
Article – Housing and Community Development 21
4–504. 22
(a) In this section, “Fund” means the Rental Housing Fund. 23
(b) There is a Rental Housing Fund. 24
(c) The Department shall use the Fund to operate, make loans, and pay expenses 25
of the Rental Housing Program, including reserves for anticipated future losses directly 26
related to the Rental Housing Program, as provided in the State budget. 27
(d) The Department shall administer the Fund either directly or through the 28
Administration. 29
(e) The Fund consists of: 30
(1) money appropriated by the State for the Rental Housing Program under 31
§ 4–402 of this title; 32
(2) repayments and prepayments of loans made under the Rental Housing 33
Program and from loan programs under this title that have been repealed; 34 HOUSE BILL 211 3
(3) money appropriated under § 4–501(c) of this subtitle; 1
(4) money transferred to the Fund in accordance with §§ 4 –502(e), 2
4–503(d), and 4–505(h) of this subtitle and § 3–203(i) of this article; 3
(5) funds received by the Department or the Administration from the 4
federal government or other public or private sources; 5
(6) investment earnings of the Fund; [and] 6
(7) revenue distributed to the Fund under § 2–605.2 of the Tax – General 7
Article; AND 8
(8) MONEY APPROPRIATED I N THE STATE BUDGET TO THE FUND. 9
(f) (1) When the Department issues a binding commitment to make a loan, 10
the Department shall withdraw from the Fund an amount equal to the commitment. 11
(2) Subject to § 7–209 of the State Finance and Procurement Article and 12
except as otherwise provided in the State budget, after the first 8 months of a fiscal year 13
the Department may transfer unencumbered money in the Fund to any other fund 14
established under this title. 15
(G) (1) FOR FISCAL YEAR 2025 AND EACH FISCAL YEAR THEREAFTER , 16
THE GOVERNOR SHALL INCLUD E IN THE ANNUAL BUDG ET BILL AN APPROPRIA TION 17
OF $20,000,000 TO THE FUND. 18
(2) FUNDS PROVIDED UNDER THIS SUBSECTION SHALL BE 19
SUPPLEMENTAL TO , AND MAY NOT SUPPL ANT, FUNDS OTHERWISE APPROPRIATED 20
TO THE FUND. 21
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 22
as follows: 23
Article – Tax – General 24
10–204. 25
(a) To the extent excluded from federal adjusted gross income, the amounts under 26
this section are added to the federal adjusted gross income of a resident to determine 27
Maryland adjusted gross income. 28
(M) THE ADDITION UNDER SU BSECTION (A) OF THIS SECTION INCL UDES ANY 29
CAPITAL GAINS EXCLUD ED UNDER § 1400Z–2 OF THE INTERNAL REVENUE CODE. 30
4 HOUSE BILL 211
10–305. 1
(a) To the extent excluded from federal taxable income, the amounts under this 2
section are added to the federal taxable income of a corporation to determine Maryland 3
modified income. 4
(d) The addition under subsection (a) of this section includes the additions 5
required for an individual under: 6
(1) § 10–204(b) of this title (Dividends and interest from another state or 7
local obligation); 8
(2) § 10–204(c)(2) of this title (Federal tax–exempt income); 9
(3) § 10–204(e) of this title (Oil percentage depletion allowance); 10
(4) § 10–204(i) of this title (Deduction for qualified production activities 11
income); 12
(5) § 10–204(j) of this title (Deduction for costs for security clearance 13
administrative expenses and construction and equipment costs incurred to construct or 14
renovate a sensitive compartmented information facility); [and] 15
(6) § 10–204(l) of this title (Deduction for donations to qualified permanent 16
endowment funds); AND 17
(7) § 10–204(M) OF THIS TITLE (CAPITAL GAINS EXCLUDE D FOR 18
INVESTMENT IN OPPORTUNITY ZONE ). 19
SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 20
as follows: 21
Article – Real Property 22
14–104. 23
(a) In this section, “first–time Maryland home buyer” means an individual who 24
has never owned in the State residential real property that has been the individual’s 25
principal residence. 26
(b) Except as provided in subsection (c) of this section, in every written or oral 27
agreement for the sale or other disposition of property, it is presumed in the absence of a 28
contrary provision in the agreement or the law, that the parties to the agreement intended 29
that the cost of any recordation tax or any State or local transfer tax shall be shared equally 30
between the grantor and grantee. This section does not apply to mortgages or deeds of trust. 31
HOUSE BILL 211 5
(c) (1) The entire amount of recordation tax and local transfer tax shall be paid 1
by the seller of improved, residential real property that is sold to a first–time Maryland 2
home buyer who will occupy the property as a principal residence, unless there is an express 3
agreement between the parties to the agreement that the recordation tax and local transfer 4
tax will not be paid entirely by the seller. 5
(2) [The] EXCEPT AS PROVIDED IN § 13–203 OF THE TAX – PROPERTY 6
ARTICLE, THE entire amount of State transfer tax shall be paid by the seller of improved, 7
residential real property that is sold to a first–time Maryland home buyer who will occupy 8
the property as a principal residence. 9
(3) This subsection does not apply to tax sales of property under Title 14, 10
Subtitle 8 of the Tax – Property Article. 11
(4) If there are two or more grantees, this subsection does not apply unless 12
each grantee is a first–time Maryland home buyer or a co–maker or guarantor of a purchase 13
money mortgage or purchase money deed of trust as defined in § 12–108(i) of the Tax – 14
Property Article for the property and the co–maker or guarantor will not occupy the 15
residence as the co–maker’s or guarantor’s principal residence. 16
(5) Paragraphs (1) and (2) of this subsection apply only if each grantee or 17
an agent of the grantee provides a statement that is signed under oath by the grantee or 18
agent of the grantee stating that: 19
(i) 1. The grantee is a first–time Maryland home buyer as 20
defined under subsection (a) of this section; and 21
2. The residence will be occupied by the grantee as the 22
grantee’s principal residence; or 23
(ii) 1. The grantee is a co–maker or guarantor of a purchase 24
money mortgage or purchase money deed of trust as defined in § 12–108(i) of the Tax – 25
Property Article for the property; and 26
2. The grantee will not occupy the residence as the 27
co–maker’s or guarantor’s principal residence. 28
(6) A statement under paragraph (5) of this subsection by an agent of a 29
grantee shall state that the statement: 30
(i) Is based on a diligent inquiry made by the agent with respect to 31
the facts set forth in the statement; and 32
(ii) Is true to the best of the knowledge, information, and belief of the 33
agent. 34
Article – Tax – Property 35 6 HOUSE BILL 211
13–203. 1
(a) (1) Except as provided in subsections (a–1) and (b) of this section, the rate 2
of the transfer tax is 0.5% of the consideration payable for the instrument of writing. 3
(2) The consideration: 4
(i) includes the amount of any mortgage or deed of trust assumed 5
by the grantee; and 6
(ii) subject to item (i) of this paragraph, includes only the amount 7
paid or delivered in return for the sale of the property and does not include the amount of 8
any debt forgiven or no longer secured by a mortgage or deed of trust on the property. 9
(a–1) (1) Except as provided in subsection (b) of this section, the rate of the 10
transfer tax is 0.5% of the consideration paid for the transfer of a controlling interest in a 11
real property entity as defined in § 13–103 of this title that has developed real property 12
under Section 42 of the Internal Revenue Code, the Low Income Housing Tax Credit 13
Program. 14
(2) The consideration under this subsection shall be the actual payment 15
made by the purchaser to the seller for the purchase of the interest. 16
(b) (1) In this subsection, “first–time Maryland home buyer” means an 17
individual who has never owned in the State residential real property that has been the 18
individual’s principal residence. 19
(2) If there are two or more grantees, this subsection does not apply unless 20
each grantee is a first–time Maryland home buyer or a co–maker or guarantor of a purchase 21
money mortgage or purchase money deed of trust as defined in § 12–108(i) of this article 22
for the property and the co–maker or guarantor will not occupy the residence as the 23
co–maker’s or guarantor’s principal residence. 24
(3) Notwithstanding any other provision of law, for a sale of improved 25
residential real property to a first–time Maryland home buyer who will occupy the property 26
as a principal residence, [the rate of the transfer tax is 0.25% of the consideration payable 27
for the instrument of writing and the transfer tax shall be paid entirely by the seller] THE 28
RATE OF THE TRANSFER TAX IS ON THE CONSIDERATI ON PAYABLE FOR THE 29
INSTRUMENT OF WRITIN G AS FOLLOWS: 30
(I) 0.25% ON THE CONSIDERATIO N OF UP TO $1,000,000 TO BE 31
PAID ENTIRELY BY THE SELLER; AND 32
HOUSE BILL 211 7
(II) 0.5% ON THE CONSIDERATION IN EXCESS OF $1,000,000 TO 1
BE PAID EQUALLY BETWEEN THE BUYER AND THE SELLER, UNLESS THERE IS AN 2
EXPRESS AGREEMENT BE TWEEN THE BUYER AND THE SELLER TO THE CONTRARY . 3
(4) To qualify for the exemption under paragraph (3) of this subsection, 4
each grantee or an agent of the grantee shall provide a statement that is signed under oath 5
by the grantee or agent of the grantee stating that: 6
(i) 1. the grantee is an individual who has never owned in the 7
State residential real property that has been the individual’s principal residence; and 8
2. the residence will be occupied by the grantee as the 9
grantee’s principal residence; or 10
(ii) 1. the grantee is a co–maker or guarantor of a purchase 11
money mortgage or purchase money deed of trust as defined in § 12–108(i) of this article 12
for the property; and 13
2. the grantee will not occupy the residence as the 14
co–maker’s or guarantor’s principal residence. 15
(5) A statement under paragraph (4) of this subsection by an agent of a 16
grantee shall state that the statement: 17
(i) is based on a diligent inquiry made by the agent with respect to 18
the facts set forth in the statement; and 19
(ii) is true to the best of the knowledge, information, and belief of the 20
agent. 21
SECTION 4. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 22
as follows: 23
Article – Tax – General 24
10–218. 25
(a) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 26
INDICATED. 27
(2) “QUALIFIED RESIDENCE ” HAS THE MEANING STAT ED IN § 163 OF 28
THE INTERNAL REVENUE CODE. 29
(3) “QUALIFIED RESIDEN CE INTEREST” HAS THE MEANING STAT ED 30
IN § 163 OF THE INTERNAL REVENUE CODE. 31
8 HOUSE BILL 211
(B) Only an individual who itemizes deductions on the individual’s federal income 1
tax return may elect to itemize deductions on the individual’s income tax return. 2
[(b)] (C) An individual who elects to itemize deductions is allowed as a deduction 3
the sum of the individual’s federal itemized deductions: 4
(1) limited and reduced as required under the Internal Revenue Code; 5
(2) further reduced by any amount deducted under § 170 of the Internal 6
Revenue Code for contributions of a preservation or conservation easement for which a 7
credit is claimed under § 10–723 of this title; [and] 8
(3) further reduced by the amount claimed as taxes on income paid to a 9
state or political subdivision of a state, after subtracting a pro rata portion of the reduction 10
to itemized deductions required under § 68 of the Internal Revenue Code; AND 11
(4) FURTHER REDUCED BY ANY AMOUNT DEDUCTED FOR QUALIFIED 12
RESIDENCE INTEREST UNDER § 163 OF THE INTERNAL REVENUE CODE FOR ANY 13
QUALIFIED RESIDENCE THAT IS: 14
(I) NOT A PRINCIPAL RESIDENCE ; AND 15
(II) NOT LOCATED IN THE STATE. 16
SECTION 5. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be 17
applicable to all taxable years beginning after December 31, 2022. 18
SECTION 6. AND BE IT FURTHER ENACTED, That Section 3 of this Act shall be 19
applicable to all instruments of writing recorded or filed on or after July 1, 2023. 20
SECTION 7. AND BE IT FURTHER ENACTED, Tha t Section 4 of this Act shall be 21
construed to apply only prospectively and may not be applied or interpreted to have any 22
effect on or application to any indebtedness incurred or refinanced before January 1, 2024. 23
SECTION 8. AND BE IT FURTHER ENACTED, That Section 4 of this Act shall take 24
effect January 1, 2024, and shall be applicable to all taxable years beginning after 25
December 31, 2023. 26
SECTION 9. AND BE IT FURTHER ENACTED, That, except as provided in Section 27
8 of this Act, this Act shall take effect July 1, 2023. 28