Maine lawmakers are considering a proposal that would double the state's real estate transfer tax on properties sold for over $1 million.
The legislature has debated increasing the tax multiple times over the last few decades, but it hasn't changed since 1993.
Unlike past proposals, this measure would also eliminate the tax altogether for properties being purchased by first-time homebuyers with a mortgage through Maine Housing.
House Speaker Ryan Fecteau, who introduced the measure, said that could incentivize sellers to accept offers from first-time buyers.
"The elimination of the tax would also apply to the portion typically paid by the seller, providing relief to first time homebuyers and making their bids more competitive," he told a legislative committee this week.
Money generated through the tax increases would fund state programs that subsidize affordable housing construction, including the rural rental affordable housing program and affordable housing tax credit program. The programs, which have been buoyed by state and federal funds, have been popular with housing developers, and as a result, Maine has increased housing production in recent years.
But funding is running dry, and Dan Brennan, executive director of MaineHousing, said the state will have obligated all available funds for housing production by this fall.
The Mills administration supports the proposal, said Greg Payne, the governor's housing adviser.
"We're concerned that high-end home purchases are distorting Maine's housing markets in unprecedented ways, making it that much more difficult for first-time homebuyers and others of modest means to gain access to the ladder of economic opportunity and wealth building that homeownership can represent," Payne told the taxation committee Thursday.
Some real estate agents agree. Others, including the Maine Association of Realtors, said they oppose tax increases. And they argued the bill could deter transactions involving multi-family homes in excess of $1 million.
"In reality, the tax burden of increased real estate transfers would largely be shared by Maine's small businesses and housing providers because many sales over $1 million are commercial multi-family properties," said Skowhegan-based realtor Aaron Bolster.
Fecteau said 925 borrowers used MaineHousing's first time homebuyer program last year, and more than 1,100 properties were sold in Maine for $1 million or more.
