BILL NUMBER: S849

SPONSOR: HELMING
 
TITLE OF BILL:

An act to amend the tax law, in relation to establishing the USDA
construction tax credit

 
PURPOSE OR GENERAL IDEA OF BILL:

To provide a tax credit to homebuilders who sell homes to homebuyers
financing the purchase with a USDA mortgage.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1: Amends section 210-B of the tax law to add a new subdivision
61 which establishes the USDA construction tax credit for the franchise
tax on business corporations. This credit will be equal to fifteen
percent of the difference between the total cost to build a home and the
final sales price when a home purchase is financed with a USDA mortgage.
A USDA mortgage is defined as any mortgage loan subject to provisions of
Title 7 CFR Part 3550, Title 7 CFR Part 3555, or Title 7 CFR Part 3560.
              

Section 2: Amends section 606 of the tax law to add a new subsection
(bbb) which establishes the USDA construction tax credit for personal
income tax. This credit will equal to fifteen percent of the difference
between the total cost to build a home and the final sales price when a
home purchase is financed with a USDA mortgage. A USDA mortgage is
defined as any mortgage loan subject to provisions of Title 7 CFR Part
3550, Title 7 CFR Part 3555, or Title 7 CFR Part 3560.

Section 3: Directs the commissioner of the Department of Taxation and
Finance to promulgate rules and regulations necessary to implement this
act.

Section 4: Provides an immediate effective date.

 
JUSTIFICATION:

It is widely acknowledged that New York State is facing a severe housing
shortage. While this issue impacts the entire state, the shortage of
housing in rural areas requires policy solutions which address the
unique needs of these areas. In rural communities, between 75% and 78%
of the housing stock is owner-occupied, meaning that rental units are
especially scarce. In addition, a September 2023 report published by the
New York State Comptroller found that New York's rural housing stock had
decreased by 2.3% between 2016 and 2021. As a result, efforts to address
New York's housing shortage must include proposals specifically targeted
at increasing the housing stock in rural areas of the state.

This legislation seeks to expand the housing stock and homeownership in
rural communities by incentivizing builders to construct housing in
rural areas. The legislation provides a tax credit for builders who
construct homes and sell them to individuals financing the home purchase
through a USDA mortgage. These mortgages provide low to moderate-income
individuals in rural areas with financing to purchase single or multi-
family homes. Providing this tax credit to builders will incentivize new
construction in rural areas, providing new opportunities for homeowner-
ship and increasing the stock of available rental units.
 
PRIOR LEGISLATIVE HISTORY:

2024: 58963 referred to Budget and Revenue/A.10445 referred to Ways and
Means

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.