BAM NEWS

Legislature: We Are All Consumed With Work At The Capitol
Oh where do I begin? First, THANK YOU! You all did an excellent job lobbying the State Senate on the bills. The House is next. You sent over 500 messages to the Minnesota State Senate. Lets try to repeat that at the House. Look for an email later this week to start pounding the House on the warranty bills in the senate.
Warranty BillsWhat our lobbyist Lisa Frenette likes to define as the 6 pieces to an ugly puzzle are currently sitting on the floor of each body – the House and the Senate, respectively.
BAM has come to agreement with 4 of the authors and will remain neutral on their passage. We are still working to amend or kill the attorney’s fee provision (HF211/SF2170) and the bill uncapping damages to homeowners (HF239/SF6). Both of these bills will hurt the industry through increased litigation and insurance costs. You can download a summary of the bills here: http://www.bamn.org/Documents/WarrantyBillExp042109.pdf
Construction Jobs Coalition – Help Us Fund the $8,000 Tax Credit Up Front!
We are working with a large group of construction entities including commercial construction and the labor unions to get the legislature to stimulate construction job creation. See the talking points here: http://www.bamn.org/Documents/jobscoalitiontalkingpoints0409.pdf
The biggest piece we are working on with the coalition is to “fund” the new $8,000 tax credit up front for first time homebuyers. Currently, when a new homebuyer buys a new home this year, they have to wait until they file their taxes next year to receive the tax credit. But as you know all too well, banks are requiring buyers come to the closing with more money for a down payment.
This legislative proposal we are trying to pass would provide a way for the homeowner to use the tax credit as a down payment. As we have written it, the MN Housing Finance Agency would provide a short term, second mortgage for the amount of the credit. The homebuyer would pay it off when they receive the tax credit. Everyone wins! Stay tuned for more info. Many other states have passed a similar program and are having great success with the program.
Really BAD JUJU From the House Tax Committee Have they lost their minds? They decided to balance the state budget by getting rid of the home mortgage deduction we all take on our taxes as homeowners. I bring you the summary courtesy of our friends at the MN Realtors Association, thank you to Chris Geller for sending this our way:
BACKGROUND: The Minnesota legislature and many other state governments find themselves in a situation familiar to many Minnesota households – their expenses have outpaced their revenue. Whether it is your family budget, a business budget or government budget, when expenses are higher than income you have to make choices. Since 1992, even with all of the Budget Shortfalls Minnesota has faced, the spending has increased each and every year. In fact, Minnesota State spending has gone from $14.5 billion in 1992/93 to $34.6 billion in 2008/09 – that’s a whopping 138 percent increase.
To resolve the budget shortfall, legislators have a number of options: 1) raise taxes to cover the government spending; 2) reduce spending to equalize the revenue projected; 3) raise revenue and reduce spending. The House/Senate DFL plans focus on option 3 – raise taxes and reduce spending. Governor Pawlenty has proposed a plan focused on reducing spending and raising revenue without raising taxes.
HOUSE TAX BILL HURTS REAL ESTATE. The DFL House Tax Plan raises revenue by cutting a number of income tax deductions. Of significant concern for all current and new homeowners, the DFL House plan eliminates two major real estate tax deductions: the Mortgage Interest Deduction and Real Estate Property Taxes. The bill also eliminates provisions of the Relative Homestead Tax.
Elimination of Mortgage Interest Deduction (MID) – a feature of the tax code since 1933, the MID has helped numerous generations achieve the American Dream of owning a home. A significant public policy objective for decades, homeownership stabilizes families, neighborhoods and communities. The House DFL Tax Bill eliminates the MID for homeowners and replaces it with a "housing credit" for qualified homeowners. The maximum credit is $420, which is equal to 7 percent (7%) of up to $6,000 of mortgage interest paid during the taxable year. However, no credit is applied to the first $4,000 of interest paid. Therefore, a homeowner must pay at least $10,000 in MID in order to receive the full $420 credit. As an example, if a homeowner has mortgage interest of $8,000 in the tax year, the credit equals $280. ($8,000 - $4,000 = $4,000 x 7% = $280).
This provision hurts young families disproportionately because mortgage debt loads are highest when people are establishing their households. This provision changes the financial plans numerous families have made when purchasing a home and increases the financial difficulties many are facing during this economic downturn. At a time when housing is finally getting a financial foothold why eliminate a tax provision that has helped millions of families achieve the "American Dream?"