Quote:
Originally Posted by jyl
Read the bill carefully. The excise tax applies to "Qualified Taxpayers" which is defined as "“Qualified taxpayer” means a person or entity that owns 10 or more qualified properties that are single family dwellings or 25 or more qualified properties that are either single family residential dwellings or multifamily dwellings in this state during the calendar year."
The target of the bill is large "institutional" type landlords - the ones who own whole fleets of rental houses/units. I think, for that target, the cutoff (10 units if they are all single family houses, or 25 units if they are a mix of houses and apartments) is too low - the big guys own hundreds and thousands of houses and apartments in a metro region, not 30 or 50. I also think the bill is ambiguously drafted because sec (2)(g)(1) doesn't make it clear if it is counting each apartment unit or each apartment building.
A 25% excise tax is punitive, of course. I think that is indeed the bill's intent: to cripple/force out the large institutional landlords (e.g. the private equity funds that are buying houses by the hundreds of thousands) and to favor small mom and pop type landlords. I'm not saying if that's good or bad, but that is probably the intent.
Anyway, if you own dozens of rental houses or a larger apartment building, this will be a problem. If it passes, which I doubt.
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How and why did they decide to stop at 10? I know more then a few individuals who own more then 10 and they work their asses off for it. They will get screwed royally. Now, its a catch 22 here. When someone owns more then a few pieces of properties, ideally they should be under an corp. when that happens, they are subject to that BS 25% tax. Do you protect yourself or pay the 25 % yearly? They hang you by the ankle knowing you will pay it. Today, its 10 properties, next months, it may be 4 or 3? Who knows?