Limits the tax imposed on refinanced mortgages to the difference between the total indebtedness secured by the new mortgage and the remaining indebtedness, which had been secured on the former mortgage.
TITLE OF BILL: An act to amend the tax law, in relation to limiting the tax imposed on refinanced mortgages to the difference between the total indebtedness secured by the new mortgage and the remaining indebtedness secured by the former mortgage
PURPOSE OR GENERAL IDEA OF BILL: To address the concerns of real property owners double taxation. This bill would allow real property owners who refinance their mortgages to be taxed on the remaining amount of indebtedness instead of the original amount of the mortgage.
JUSTIFICATION: Real property owners, especially homeowners, should not be punished for taking advantage of refinancing options. Under the current law, real property owners, in essence, are being taxed twice: first on the original amount of the mortgage and second on the new mortgage after refinancing. This legislation will alleviate this burden by taxing only the remaining amount of indebtedness.
The mortgage refinancing boom of the past few years reached a high-water mark in 2003. Assuming that the pace of refinancing in the second half of 2003 was roughly equal to that of the first half, nearly 12 million mortgage loans were refinanced in 2003 on the heels of more than 8 million in 2002. With about 75 million home-owning households in the United States, 580 of which have mortgages, this means that more than one out of every four home mortgages in the country was refinanced in 2003.
By refinancing their mortgages, homeowners can significantly reduce their monthly mortgage payments, freeing up cash for other purposes. Moreover, it has become increasingly common, particularly in this period of rapid home price appreciation, for refinancing homeowners to take on a new mortgage for a larger amount than the loan they pay off. In short, there is no reason that real property owners should have to pay the same tax twice.
PRIOR LEGISLATIVE HISTORY: A.7806 of 2008. A.11828 of 2006 (MAISEL)
FISCAL IMPLICATIONS: Undetermined.
EFFECTIVE DATE: This act shall take effect on the first of January next succeeding the date on which it shall have become a law, and shall apply to the calculation of amount of tax due on mortgages executed on and after such date.
STATE OF NEW YORK ________________________________________________________________________ 3048 2011-2012 Regular Sessions IN SENATE February 7, 2011 ___________Introduced by Sen. KRUGER -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to limiting the tax imposed on refinanced mortgages to the difference between the total indebtedness secured by the new mortgage and the remaining indebtedness secured by the former mortgage THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph (b) of subdivision 2 of section 250 of the tax law, as amended by section 1 of part Q of chapter 60 of the laws of 2004, is amended to read as follows: (b) Where all or part of the indebtedness secured by a mortgage of real property within any city in the state having a population of one million or more has been paid and new funds are advanced or re-advanced which are to be secured by such mortgage, OR BY A NEW MORTGAGE WHICH SECURES THE BALANCE OF INDEBTEDNESS REMAINING UNPAID UNDER THE FORMER MORTGAGE PLUS ALL NEW FUNDS ADVANCED OR RE-ADVANCED, the contract or agreement by which such funds are advanced or re-advanced shall be deemed a mortgage of real property for purposes of this article, and shall be taxable as such upon the amount of such new funds, OR UPON THE DIFFERENCE IN AMOUNTS BETWEEN THE TOTAL INDEBTEDNESS SECURED BY THE NEW MORTGAGE AND THE REMAINING INDEBTEDNESS WHICH HAD BEEN SECURED BY THE FORMER MORTGAGE, except as otherwise provided in section two hundred fifty-three-b of this article. S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law, and shall apply to the calculation of amount of tax due on mortgages executed on and after such date.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD06389-01-1