FISCAL NOTE

Date Requested: January 10, 2019
Time Requested: 03:37 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1996 Introduced HB2225
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to provide a tax credit for first time home buyers. The bill establishes eligibility criteria, sets a maximum credit of $5,000, and excludes homes over $800,000.
    
    According to our interpretation and based on available data, a 10 percent refundable Personal Income Tax credit for first-time home buyers of up to a maximum of $5,000 would result in a revenue loss of roughly $27.5 million a year, beginning in FY2020 and ending with the scheduled expiration of the proposed tax credit in FY2024. The proposed tax credit would apply to qualified home sales between April 1, 2019 and May 1, 2023.
    
    Additional administrative costs to the State Tax Department would be $56,000 in FY2020 and $40,000 in subsequent years due to review of proof of “first time home buyer”.
    
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 56,000 40,000
Personal Services 0 40,000 40,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 1,000 0
Other 0 15,000 0
2. Estimated Total Revenues 0 -27,500,000 -27,500,000


Explanation of above estimates (including long-range effect):


    According to our interpretation and based on available data, a 10 percent refundable Personal Income Tax credit for first-time home buyers of up to a maximum of $5,000 would result in a revenue loss of roughly $27.5 million a year, beginning in FY2020 and ending with the scheduled expiration of the proposed tax credit in FY2024. The proposed tax credit would apply to qualified home sales between April 1, 2019 and May 1, 2023.
    
    Additional administrative costs to the State Tax Department would be $56,000 in FY2020 and $40,000 in subsequent years due to review of proof of “first time home buyer”.
    



Memorandum


    The stated purpose of this bill is to provide a tax credit for first time home buyers. The bill establishes eligibility criteria and sets a maximum credit of $5,000.
    
    Rules will need to be promulgated to administer this law, and no provision for rulemaking is given. Insufficient time is given before the tax credit becomes effective because returns and associated schedules will need to be developed.
    
    The bill title fails to note that the bill defines terms, has an internal effective date and is a refundable exemption.
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov