New Hampshire lawmakers are currently evaluating two significant tax proposals aimed at second homes and rental properties that remain unoccupied for extended periods. These initiatives were discussed in a recent session of the House Ways and Means Committee and sparked intense debate across party lines.
Proposed Tax on Second Homes
The first bill suggests a 0.75% tax on second homes valued at $500,000 or more. Democratic Representative Jonah Wheeler from Peterborough is the main sponsor of this bill. He stated that it is crucial to address the issue of empty properties, emphasizing that residents living year-round are facing increasing housing costs while landlords do not contribute back to the community.
- Estimated annual revenue: $15 million
- All tax revenues to benefit local municipalities
Despite its potential benefits, the bill faces criticism. Representative Rosemarie Rung, a Democrat from Merrimack and a property owner in Moultonborough, argued that resources should be allocated fairly across communities. She expressed concerns about the implications for towns with fewer second homes receiving unequal funding.
Supplemental Residence Tax Proposal
The second proposal introduces a “supplemental residence tax,” aimed at property owners whose homes are unoccupied for over six months or used as seasonal rentals. According to its sponsor, Democratic Representative Ellen Read from Newmarket, this tax would require homeowners to pay a sum equivalent to their property tax bill.
- Potential revenue for the state: more than $900 million
Read defended the proposal, arguing that keeping properties off the rental market during a housing crisis imposes a burden on the state. She believes that all property owners should contribute to alleviate the housing shortage.
Reactions from Property Owners
The proposed taxes encountered resistance from various stakeholders, including real estate professionals and vacation rental operators. Chelsi Christensen, who markets her North Hampton farm as a short-term rental, expressed her apprehension. She stated that existing costs, such as taxes and maintenance, severely impact her finances.
Christensen argued that the taxation felt punitive towards second homeowners. She urged lawmakers to explore alternative solutions, such as encouraging the development of tiny homes or accessory dwelling units (ADUs) to enhance housing availability.
Future Considerations
Governor Kelly Ayotte and bipartisan legislative leaders aim to improve housing availability. However, Ayotte emphasized the importance of giving recently enacted housing laws time to take effect before introducing new legislation. Both tax bills are expected to proceed to a subcommittee for further evaluation.
Additionally, a future proposal targeting luxury second homes will be reviewed by the legislature’s Housing Committee. These discussions highlight ongoing efforts in New Hampshire to address housing challenges while balancing the interests of various stakeholders.
