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Committee advances cut to gross‑receipts tax on new construction to spur housing development
Summary
HB325 would lower the gross receipts tax burden on new residential construction; builders, apartment groups and realtors testified in favor, and the committee recommended the bill by a unanimous do‑pass vote.
The House Commerce & Economic Development Committee voted to advance House Bill 325, a measure aimed at reducing gross receipts tax (GRT) burdens on new residential construction to encourage increased housing supply.
Sponsor Representative Armstrong (lead) told the committee that New Mexico’s current gross receipts treatment of construction is unusually burdensome and raises costs for homebuilders. Builders and trade associations testified in support, arguing that high GRTs on construction increase costs for buyers and renters and deter private capital from building new housing stock. Mackenzie Bishop of Abrazo Homes and representatives from the New Mexico Home Builders, the Apartment Association, NAOM and the Association of Realtors urged approval, citing an estimated state shortage of about 40,000 housing units.
Supporters said reducing the tax burden would improve feasibility for private developers and increase housing starts. Randy Trainor, representing home‑building interests, told the committee that legislative action is necessary because public appropriations alone cannot close the housing gap.
Committee members discussed fiscal impacts and municipal property‑tax offsets. Some members noted the Legislative Finance Committee’s fiscal analysis and asked how much of the projected fiscal cost would be recouped through increased property tax revenue and economic activity from new construction. Sponsors said they expected a net positive long‑term effect from increased housing starts and property valuation, but acknowledged the fiscal impact requires further modeling.
The committee recorded a do‑pass recommendation; the clerk reported a final tally of 10 yes, 0 no.
Discussion vs. action: the hearing combined testimony from builders, developers, and realtors and the committee voted to recommend the bill to the full House.
Next steps: the bill will be reported to the House calendar with a committee recommendation. Lawmakers and analysts will continue to evaluate fiscal modeling and potential offsets from increased property taxes and economic activity.
