Two new bills proposing taxes on second homes, and houses that sit unoccupied for six months of the year, came before the House Ways and Means Committee Monday.
The proposals generated sharp debate, and questions about how the taxes, which are opposed by GOP leaders, would be implemented, and to what effect.
One bill would impose a 0.75% tax on second homes worth $500,000 or more.
“We do have to address a situation where these homes are left empty and people are not contributing back to the communities in which they are residing in at the same time people who are there 365 days a year are getting priced out,” said Rep. Jonah Wheeler, a Democrat from Peterborough and lead sponsor of the bill.
Under Wheeler’s plan, which the New Hampshire Municipal Association estimates could generate at least $15 million per year, all receipts would flow back to the city or town where the property is located.
Critics of the bill, including Merrimack Rep. Rosemarie Rung, a Democrat who owns a small lakefront camp in Moultonborough, said any policy that would end up sending more money to towns with high property values needs to be rethought.
“To think Moultonborough needs more school funding than communities like Merrimack, which has few if any second homes, is absurd," Rung said.
Another bill before the committee would create a “supplemental residence tax.” It would require property owners pay the state the equivalent of their property tax bill if their property sits unoccupied for six months of the year or is a seasonal rental.
“You have the right to keep your property out of rent, but, in a housing crisis, you don’t have the right to keep it out of the rental market without paying something back to the state, because you are actively harming the state,” said Democratic Rep. Ellen Read of Newmarket, the lead sponsor of this bill.
The New Hampshire Department of Revenue says Read’s bill could generate more than $900 million.
Both proposals drew some support but mostly opposition, including from people who sell real estate or are involved in vacation rentals.
Chelsi Christensen, who rents her farm in North Hampton on AirBNB for $1,900 a night in the summer, told the committee that taxes, insurance and upkeep are already making it hard for her to make money. She said if she was forced to keep the place occupied all year long, she’d need to find a renter willing to pay $10,000 per month. She told lawmakers the proposal felt like a “penalty” for people who own or rent out second homes.
“My opinion is that’s not the answer,” Christensen said, urging lawmakers to consider other ways to get more practical kinds of housing on the market, like ADUs or tiny homes.
“We go out to Epping, we buy land, we have builders that build little teeny homes that are affordable for people, who build entry level homes. That’s the answer,” she said.
Gov. Kelly Ayotte and legislative leaders in both parties say they want housing policies that get more units on the market, but Ayotte has also said she wants to give recently passed housing laws a chance to play out before focusing on new legislation.
Both of these bills are expected to be sent to a subcommittee for more review.
Another proposal that would aim to charge a new “assessment” on luxury second homes will be heard by the legislature’s Housing Committee.
