Del. Senate passes bill to encourage more affordable housing investments
DOVER, Del. – The Delaware Senate has passed legislation to encourage more public and private investment in the construction of new, affordable housing units throughout the state.
Senate Substitute for Senate Bill 87 would fully exempt affordable housing projects funded by nonprofits and government entities from the state’s portion of the realty transfer tax. Data from the National Low Income Housing Coalition shows that Delaware is facing a shortage of more than 20,000 affordable rental homes available to extremely low income renters.
SS 1 for SB 87 would effectively lower the cost for both buyers and sellers and help spur growth among the housing stock most within reach for low and medium income families.
Delaware’s reality transfer tax is a one-time fee that is imposed when a property is sold from one party to another. The state currently charges 2.5% of the sale cost, while Delaware’s local governments collect 1.5%. The total cost of the combined 4% tax is usually split between the buyer and seller.
Under current Delaware law, a residential property rehabilitated by Habitat for Humanity, a church or other nonprofit is exempt from the state’s portion of the realty transfer tax. This legislation would expand that exemption to include newly constructed affordable housing sold by nonprofits, as well as affordable housing built with federal, state, county, or municipal funding.
Senator Russell Huxtable, prime sponsor of SS 1 for SB 87, released the following statement on the legislation:
“Towns and counties have a lot of leverage when it comes to determining what types of housing get built in their jurisdictions. The bill we passed today will encourage our local jurisdictions to participate in the growth of affordable housing more robustly, while streamlining existing transfer tax exemptions for first-time homebuyers. While we still have a lot of work left to do around affordable housing, I want to thank my Senate colleagues for taking this important step to make sure our tax code aligns with our values and the needs of our residents.”
SS 1 for SB 87 now heads to the House for consideration.