Committee hears bill to let builders exclude half of income from sales of newly constructed starter homes

Representative Lukas Schubert, sponsor of House Bill 895, told the Montana House Tax Committee the proposal would create a 50% write‑off for income from the sale of newly constructed single‑family homes and duplexes sold to a third party for less than 85% of the county median residential value.

Schubert said the measure would apply to both individual and corporate income tax and that the Department of Revenue would calculate the county median during reappraisal cycles so builders could know qualifying values. "This bill will create a 50% write off for the income generated from the sale," Schubert said, adding the change is intended to lower the cost to produce homes and thereby reduce sale prices.

The bill drew pushback from accounting and taxpayer groups. Alan Lloyd, executive director of the Montana Society of CPAs, said the organization "reluctantly oppose[s] House Bill 895," not because of the housing goal but because the group opposes adding complexity to the tax code. Bob Story of the Montana Taxpayers Association said the proposal lacks arms‑length safeguards: "there's really no arms length language in this bill," he said, warning the measure could be gamed by sales to relatives or related parties.

Brian Olson of the Montana Department of Revenue appeared as an informational witness and said he was available to answer implementation questions. Committee members pressed the sponsor for fiscal detail; Representative Valverum asked whether a fiscal estimate existed. Schubert said he had asked Legislative Fiscal and "they indicated that they would not be able to calculate it" at this time and urged that a fiscal note be developed before executive action.

Members also questioned eligibility and safeguards. Representative Minor cited concerns about missing sideboards; Schubert pointed to language in the bill that disallows the subtraction if the seller receives other compensation beyond the sales price and reiterated the measure applies only to newly constructed homes. Representative Craig asked whether the benefit would apply to companies; Schubert confirmed the write‑off applies to sole proprietorships and corporations equally.

Schubert closed by urging the committee to advance the bill so the fiscal note could be debated on the House floor: "I think that if we're gonna be reducing the government tax burden on producing new supply ... this is something that we ought to do," he said.

The committee closed the hearing on House Bill 895 with no formal action recorded; members were reminded that executive action on bills heard that day would follow and that a fiscal note was likely important to future consideration.