Purpose

Introduce a refundable sales and use tax exemption to help with the construction costs of new multifamily housing for first-time homebuyers.

Main Provisions

• Adds a new Subdivision 55 to Minn. Stat. 297A.71 titled “Construction materials for new multifamily home construction.”
• Exemption applies to materials, supplies, and equipment used in and incorporated into the construction of new multifamily residential housing for first-time homebuyers.
• Definition of multifamily housing for this exemption is limited to duplexes and triplexes.
• Eligibility requires the first-time homebuyer to own and occupy at least one unit of the housing.
• Exemption caps the taxes paid on the first $460,000 of the construction cost.
• The tax exemption on eligible purchases is handled as a refundable credit: taxes are charged as if the regular rate under Minn. Stat. 297A.62 applies and then refunded under the process in Minn. Stat. 297A.75.
• The provision is temporary and expires on July 1, 2033.

Significance and Changes to Law

• Creates a targeted tax incentive to encourage the construction of small multifamily housing (duplexes and triplexes) intended for first-time buyers.
• Adds a new refundable mechanism rather than a straightforward exemption, potentially requiring beneficiaries to apply for refunds under existing refund procedures.
• Introduces a construction-cost cap ($460,000) to limit the incentive to a defined amount of project cost.
• Establishes a finite timeframe, ending July 1, 2033, after which the exemption would no longer apply unless extended.

Implementation & Conditions

• Applies to construction materials for new multifamily housing for first-time buyers.
• Requires buyer to be an owner-occupant of at least one unit.
• The exemption is triggered through the tax collection process (rate application then refund) rather than a direct exemption at the point of sale.

Effective Date

• The provision would take effect as part of the act and expire on July 1, 2033.

Relevant Terms first-time homebuyer, duplex, triplex, multifamily residential housing, construction materials, sales and use tax, refundable exemption, tax refund, Minnesota Statutes 297A.71, Minnesota Statutes 297A.75, tax rate under Minn. Stat. 297A.62, construction cost cap, $460,000, owner-occupant, expiration 2033