Wake officials criticize tax break for builders
Posted July 6, 2009 6:55 p.m. EDT
Raleigh, N.C. — Wake County officials are criticizing a bill under consideration by state lawmakers that would give builders extra time to pay property taxes on new, unsold homes.
House Bill 852 would allow builders to defer certain tax payments on new houses for up to three years or until they're sold. Builders would still have to pay taxes on the land during that period.
Once a house sells, the builder would be required to pay the back taxes with interest – costs that could be passed along to the buyer.
The House passed the measure two weeks ago, and the Senate is reviewing the bill.
"Some folks are hurting that bad that they need that extra bit of help to keep their cash flow working so they can stay in business. I think this will help them do that," said Suzanne Harris, vice president for government affairs for the Home Builders Association of Raleigh-Wake County. "It is something, I think, some builders will take advantage of if they need that liquidity."
Good business for builders isn't necessarily the best option for local government, however.
"The reason for our opposition is the concern about the loss of revenue that the county would receive," Wake County Deputy Manager Joe Durham said.
Durham estimated the county could lose as much as $3.7 million next year – money that could go to local schools and human services programs.
"Every dollar does count. This does have an impact on our budget next year," he said.
Wake County commissioners on Monday delayed approving a proposed resolution opposing the bill.
Harris said the bill would benefit taxpayers in the long run.
"No one's going to benefit if the house goes into foreclosure or the homebuilder goes bankrupt," she said.