H168 - Exempt Builders' Inventory (SL 2015-223)

Overview: S.L. 2015-223 exempts the increase in value of certain improvements to real property held for sale by a builder:

• For residential real property, a builder may exclude for 3 years the increase in value due to subdivision, improvements, and buildings that are either a new single-family residence or a duplex.
• For commercial property, a builder may exclude for 5 years the increase in value due to subdivision and improvements - excluding buildings.

To qualify as a builder, the property owner must be in the business of buying real property, making improvements to it, and then reselling it. The owner is not required to be licensed as a general contractor.

S.L. 2015-223 will become effective for taxes imposed for taxable years beginning on July 1, 2016, and apply to subdivision of or other improvements made on or after July 1, 2015.