Fiscal Note
Fiscal Services Division
SF 10 – Housing Trust Fund, Real Estate Transfer Tax (LSB1289XS)
Staff Contact: Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 10 eliminates an annual $3.0 million limitation on the amount of real estate transfer
tax revenue that is deposited in the Housing Trust Fund. The change is effective beginning
FY 2022.
Background
The real estate transfer tax is imposed on the transfer of real estate in the State. The tax is
equal to $0.80 per $500 (or any fractional part of $500) of consideration paid as part of or a
condition of the property transfer. As examples, the transfer of a $1,200 property would incur a
tax of $2.40, while the transfer of a $1.0 million property would incur a tax of $1,600.
The tax is paid to the county. Iowa Code section 428A.8 controls the division of the tax
revenue. The county retains 17.25% of the tax revenue for deposit in the county general fund.
The county remits the remaining 82.75% to the State. The State portion is deposited as follows:
• Housing Trust Fund, 30.0%, up to a limit of $3.0 million each fiscal year.
• Shelter Assistance Fund, 5.0%.
• State General Fund, 65.0%, plus any Housing Trust Fund revenue in excess of $3.0 million.
The following table provides a history of real estate transfer tax deposits to State funds for the
past four fiscal years.
Real Estate Transfer Tax Revenue, State Portion
In Millions
Fund FY 2017 FY 2018 FY 2019 FY 2020
Housing Trust Fund $ 3.0 $ 3.0 $ 3.0 $ 3.0
Shelter Assistance Fund 1.1 1.2 1.2 1.2
State General Fund 18.6 19.2 19.1 20.3
Total $ 22.7 $ 23.4 $ 23.3 $ 24.5
Assumption
Over the past 13 fiscal years (FY 2007 through FY 2020), the average annual rate of growth in
real estate transfer tax has equaled 2.3%. That rate of growth is assumed for FY 2021 and
future fiscal years.
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Fiscal Impact
Removing the Housing Trust Fund annual $3.0 million real estate tax revenue limit is estimated
to increase Housing Trust Fund revenue and reduce net General Fund revenue by the following
amounts:
• FY 2022 = $4.7 million
• FY 2023 = $4.9 million
• FY 2024 = $5.1 million
• FY 2025 = $5.3 million
• FY 2026 = $5.4 million
The annual amounts are projected to increase modestly over time.
Additional Potential Fiscal Impact
Existing Iowa law provides for a significant change to Iowa’s individual income tax system once
two General Fund revenue triggers are met. The first year that the triggers may be met is at the
conclusion of FY 2022. Once implemented, this contingent income tax system is projected to
reduce Iowa individual income tax by roughly $300.0 million per tax year. Since this Bill is
projected to reduce General Fund revenue in FY 2022 and after, the Bill’s changes will modestly
reduce the possibility of achieving both revenue triggers; as a consequence, the Bill could result
in delayed implementation of the income tax reduction.
Sources
State Accounting System
Legislative Services Agency analysis
/s/ Holly M. Lyons
January 25, 2021
Doc ID 1210212
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
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