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Former ‘This Old House’ tax credit could get a rehab

An old state tax credit meant to help owners of older homes may see new life and be extended to help those owning and hoping to rehabilitate old commercial-industrial property.

Commonly known as the “This Old House” program, HF473, sponsored by Rep. Cheryl Youakim (DFL-Hopkins), would provide those making improvements to qualified structures a break from any increased valuation that the improvements could cause. The House Property Tax and Local Government Finance Division held the bill over Wednesday for possible inclusion in a division report.

While the previous credit — in effect from 1993-2003 — only applied to homes, HF473 would extend to commercial-industrial properties.

A former member of the Hopkins City Council, Youakim noted that her town, like many, has older buildings and homes. This program would give residents an incentive to fix up them up, “without immediately worrying about the burden of increased taxes offsetting the benefits of their improvements,” she said.

Under the bill, the value attributable to an improvement would be fully excluded in determining the property’s taxable valuation for 10 years and then phased in, according to a nonpartisan House Research Department bill summary.

The bill would have a negligible impact on the state’s General Fund, but it could impact local governments whose budgets rely on their local property tax base.

While an estimated 6,500 homeowners and 100 businesses statewide would enroll in the program each year, according to a Department of Revenue analysis, it would create a tax shift onto other properties within the jurisdictions.

Youakim said she is willing to work through some of the tax-fairness issues as the bill moves forward.

The bill’s companion, SF208, sponsored by Sen. Ron Latz (DFL-St. Louis Park), was laid over by the Senate Taxes Committee for possible omnibus bill inclusion.

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