An Act To Encourage the Preservation of Affordable Housing
Maine Legislature, Session 122, LD 1165
Committee: Taxation
Amends: 36 MRSA §4641, 36 MRSA §4641-C, 36 MRSA §5102, 36 MRSA §5122, 36 MRSA §5200-A

Legislative Document 
No. 1165 
H.P.808 
House of Representatives, March 8, 2005 
An Act To Encourage the Preservation of Affordable Housing 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representati ve GLYNN of South Portland. 
Printed on recycled paper 
--n;~ /h. 7l/tJ£~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §4641, sub-§2-B is enacted to read: 
2-D. 
Multifamily affordable housing prQperty. 
"Multifamily 
affordable housing property" means a decent, safe and sanitary 
dwelling, apartment building or other living accommodation that 
includes at least 6 units and: 
A. 
At 
least 
Qb 
of 
the 
units 
have 
restricted 
rents 
affordable to households earning no more than 80°'0 of the 
area median 
income 
as 
determined 
by 
the 
United 
States 
Department of Housing and Urban Development: 
B. 
The property is funded by the United States Department 
of 
Housing 
and 
Urban 
Development, 
the 
United 
States 
Department 
of 
Agriculture 
or 
the 
Maine 
State 
Housing 
Authority: or 
C. 
The property c;Iualifies for low-income housing credits 
under Section 42 of the Code. 
Sec. 2. 36 MRSA §4641-C, sub-§19, as amended by PL 2001, c. 
559, Pt. I, §7 and affected by §l5, is further amended to read: 
19. 
Change in identity or form of ownership. 
Any transfer 
of 
real 
property, 
whether 
accomplished 
by 
deed, 
conversion, 
merger, 
consolidation or otherwise, if it consists of a 
mere 
change in identity or 
form of ownership of an entity. 
This 
exemption is 
limited to 
those 
transfers 
when 
no 
change 
in 
beneficial ownership is made and may include transfers involving 
corporations, partnerships, limited liability companies, trusts, 
estates, associations and other entities: aae 
Sec. 3. 36 MRSA §4641-C, sub-§20, as enacted by PL 2001, c. 
559, Pt. I, §8 and affected by §15, is amended to read: 
20. 
Controlling 
interests. 
Transfers 
of 
controlling 
interests in an entity with a fee interest in real property if 
the transfer of the real property would qualify for exemption if 
accomplished by deed of the real property between the parties to 
the transfer of the controlling interestT; and 
Sec. 4. 36 MRSA §4641-C, sub-§21 is enacted to read: 
21. 
Multifamily affordable housing property. 
Any sale or 
transfer of a multifamily affordable housing property. 
Sec. 5. 36 MRSA §5102, sub-§10-B is enacted to read: 
Page l-LRl927 (1) 
8-C. 
Multifamily affor.ruilile housing property. 
"Multifamily 
affordable housing property" means a decent, safe and sanitary 
dwelling, apartment building or other living accommodation that 
includes at least 6 units and: 
(j 
A. 
At 
least 
20% 
of 
the 
units 
have 
restricted 
rents 
affordable to households earning no more than 80% of the 
area 
median 
income 
as 
determined 
by 
the 
United States 
Department of Housing and Urban Development: 
B. 
The property is funded by the United States Department 
of 
Housing 
and 
Urban 
Development, 
the 
United 
States 
Department 
of 
Agriculture 
or 
the 
Maine 
State 
Housing 
Authority: or 
C. 
The property qualifies for low income housing credits 
under Section 42 of the Code. 
Sec. 6. 36 MRSA §5122, sub-§2, ,Q, as corrected by RR 2003, c. 
1, §38, is amended to read: 
.18 
4R 
Q. 
A fraction of any 
taxpayer 
to 
federal 
subsection 1, paragraph 
amount previously added back by the 
adjusted 
gross 
income 
pursuant 
to 
N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to 
all 
other 
property, 
for 
the 
taxable year 
immediately following the 
taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 
5'l-o 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year dur ing the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the Code, 
the term "recovery period" means 
the 
recovery 
period that would have been applicable to the property had 
Section 179 not been applied; aBa 
Sec. 7. 36 MRSA §5122, sub-§2, 1fT, as amended by PL 2003, c. 
70S, §12 and affected by §14, is further amended to read: 
T. 
For income tax years beginning on or after January 1, 
2002 and before January 1, 
2004, 
an amount equal to the 
total premiums spent for long-term care insurance policies 
certified under Title 24-A, section S07S-A as long as the 
amount subtracted is reduced by the long-term care premiums 
claimed as an itemized deduction pursuant to section SI2S. 
For income tax years beginning on or after January 1, 2004, 
an amount equal to the total premiums spent for qualified 
long-term care insurance contracts certified under Title 
24-A, section S07S-A, as long as the amount subtracted is 
reduced by any amount claimed as a deduction for federal 
income tax purposes in accordance with the Code, 
Section 
162(1) 
and by the long-term care premiums claimed as an 
itemized deduction pursuant to section SI2ST; and 
Sec. 8. 36 MRSA §5122, sub-§2.1fU is enacted to read: 
U. 
For income tax years beginning on or after January 1, 
2006, 
an 
amount 
egual 
to 
the 
total 
capital 
gains 
or 
depreciation recapture realized from the sale of multifamily 
affordable housing property. 
The amount subtracted pursuant 
to this paragraph must be reduced by any amount claimed as a 
deduction for federal income tax purposes. 
Sec. 9. 36 MRSA §5200-A, sub-§2, 1fL. as amended by PL 2003, c. 
SO 
20, Pt. EE, §3, is further amended to read: 
L. 
An 
amount 
equal 
to the 
absolute value 
of 
any 
net 
operating loss arising from a tax year beginning or ending 
in 2001 for which federal taxable income was increased under 
subsection 1, paragraph M and that, pursuant to Section 102 
of the federal Job Creation and Worker Assistance Act of 
2002, Public Law 107-147, was carried back more than 2 years 
to the taxable year for federal income tax purposes, but 
only to the extent that: 
(1) Maine taxable income is not reduced below zero; 
( 2 ) The taxable year is either within 2 years prior to 
the 
year 
in 
which 
the 
loss 
arose 
or 
within 
the 
allowable 
federal 
period 
for 
carry-over 
of 
net 
operating losses: and 
(3) 
The 
amount 
has 
not 
been previously used 
as 
a 
modification pursuant to this subsection; aae 
Sec. 10. 36 MRSA §5200-A. sub-§2, ,M, as repealed and replaced 
G 
\' 
, 
G 
.16 
lR 
by PL 2003, c. 479, §6, is amended to read: 
M. 
A fraction of any amount previously added back by the 
taxpayer to federal taxable income pursuant to subsection 1, 
paragraph N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to 
all 
other 
property, 
for 
the 
taxable year 
immediately following the taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 5% 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the 
Code, 
the 
term "recovery period" means 
the recovery 
period that would have been applicable to the property had 
Section 179 not been appliedT~nd 
Sec. 11. 36 MRSA §5200-A. sub-§2,'P is enacted to read: 
P. 
For income tax years beginning on or after January 1, 
2006, 
an 
amount 
equal 
to 
the 
total 
capital 
gains 
or 
depreciation recapture realized from the sale of multifamily 
affordable housing property. 
The amount subtracted pursuant 
to this paragraph must be reduced by any amount claimed as a 
deduction for federal income tax purposes. 
SUMMARY 
This bill exempts 
from 
the 
income tax capital gains or 
depreciation recapture associated with the sale of a multifamily 
affordable housing property. 
It also exempts 
the sale of 
a 
multifamily affordable housing property from 
the 
real estate 
transfer tax.