By Ian Karbal | Pennsylvania Capital-Star
In an effort to help first-time homebuyers in Pennsylvania, the House Housing and Community Development committee advanced a bill that would eliminate the state real estate transfer tax for people who have never owned homes before.
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As it stands, the state collects a 1% tax from both homebuyers and sellers in most real estate deals.
“Rising home prices and mortgage interest rates have made housing affordability a substantial barrier for first-time home buyers,” said Rep. Thomas Kutz (R-Cumberland), the bill’s lead sponsor. “In order to make Pennsylvania more attractive and more affordable for families and first-time home buyers, it’s important to create incentives and opportunities for young adults.”
An identical 1% tax would also be waived for people selling their homes to first-time owners in an effort to give new buyers a leg up in the market.
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“This will help to encourage sellers to sell to individuals and families rather than to companies or corporations that purchase homes as investments or rental properties,” said Kutz.
As it stands, most of the money collected through the Realty Transfer Tax goes to the state’s general revenue account, but 15% of it goes to the Keystone Recreation, Park and Conservation fund.
The Realty Transfer Tax accounted for roughly $643 million in the state’s general revenue fund in the 2022-2023 fiscal year, according to Gov. Josh Shapiro’s latest budget. It’s unclear how the proposed exemption could have affected that.
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An amendment to the bill was also passed with the intent of anticipating and closing loopholes. If multiple people are purchasing the home, they all have to be first-time homeowners. It also clarified that qualifying buyers can not have owned homes in any other state besides Pennsylvania.
The bill passed unanimously and must still be passed by the full House and then the Senate.
The House Housing and Community Development committee passed a bill that would allow Pennsylvanians to create tax deductible savings accounts meant for the purchase of their first home.
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“Home ownership strengthens communities and provides stability for families,” wrote Rep. Ryan Bizzarro (D-Erie) in a memo detailing why he’s sponsoring the bill. “A first-time homebuyers saving account can be a tool in helping people overcome financial obstacles to home ownership.”
The bill would allow individuals to deduct up to $5,000 a year from their state income tax and put that money in a savings account with the sole purpose of purchasing a first home. Joint filers would be able to claim up to $10,000 a year.
Money in those accounts could only be used to pay for a down payment on a first home and any other costs associated with closing that deal.
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Similar programs have been introduced in a handful of other states, including Virginia, Colorado and Minnesota.
The bill received bipartisan support.
“I think it’s a great proposal, said Rep. Thomas Kutz (R-Cumberland). “I look forward to offering our support from our [Republican] caucus.”
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The bill passed the House Housing and Community Development committee with a unanimous vote and must still pass both chambers of the statehouse and be signed by Gov. Josh Shapiro.
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