Committee advances demolition tax to boost housing production fund but flags exemptions and operational questions

Councilmember Kate Mink told the Government Operations and Fiscal Policy Committee that Bill 5‑25 would levy a $20,000 demolition excise on certain teardown-and-replace home projects and deposit the revenue into the Housing Initiative Fund (HIF) to support affordable housing production. “This is a bill that will increase the funding that we have for affordable housing housing construction,” Mink said, describing the tax as targeted at “a flip for profit targeting, initiative.”

Staff outlined the draft bill and several exemptions. Montgomery County staff told the committee there is an average of about 207 demolitions per year going back to 2010; staff explained the exemption that lets an owner avoid the tax if the owner occupies the replacement home as a principal residence for a minimum of five years, and that transfers of ownership before and…