Before the recent conclusion of its May session, the Alaska Legislature passed Senate Bill 179, sponsored by Senator Jesse Bjorkman, R-Nikiski.
This legislation, a result of extensive discussions with realtors, farmers, and municipal representatives, prohibits local governments from adding transfer taxes to the sale of houses and other real property, improves the program that provides property tax breaks to farmers, allows municipalities to defer taxes on property used for economic development, and improves the required assessor qualifications and property tax appeals process.
As introduced, SB 179 prohibits municipalities and the state from imposing transfer taxes, fees, or other assessments on the sale, grant, assignment, or transfer of real property. By eliminating these additional costs, the bill seeks to make homeownership more affordable for all Alaskans, particularly benefiting young families, first-time homebuyers, and seniors on fixed incomes. Representative Julie Coulombe, R-Anchorage, introduced the House’s companion legislation, HB 134.
“This is a step forward in making homeownership more attainable for all Alaskans,” said Senator Bjorkman. “By prohibiting transfer taxes and fees on real estate transactions, we ensure that families, especially young and first-time homebuyers, are not burdened with additional costs. This legislation will help maintain the equity in seniors’ homes and make the dream of homeownership more realistic for everyone in our state.”
Senate Bill 179 underwent significant amendments during the legislative session’s final days. Three provisions that had previously passed the Senate were added to the bill in the House, further enhancing its scope and impact.
Senate Bill 161, also sponsored by Senator Bjorkman, aims to bolster Alaska’s food security by amending state laws to support local farmers. This amendment aligns with recommendations from the Alaska Food Strategy Task Force 2023 Report.
“Recognizing Alaska’s heavy reliance on imported food, amending Alaska’s farm tax will make the local food system more resilient,” said Senator Bjorkman. “It also aims to lower entry barriers for new farmers, protect their privacy, and allow municipalities to extend property tax exemptions to non-food producing farms, promoting diverse agricultural opportunities.”
Bjorkman explains that the great thing about this farm bill is that it lowers taxes for farmers who are just getting into the farming industry.
“So in order to qualify for this farm tax exemption, a farmer needs to show $2500 in sales on a Schedule F. before they would have to submit all their financials and prove that they made at least 10% of their total income from farming. Well this doesn’t do that anymore. That would disqualify someone who essentially started farming as a side hustle and they made most of their money doing something else. A lot of farmers are in that exact position and that’s how they start off as small farmers. We would like to see those farmers transition into more farming and farm even more and produce more food. So this change in lowering the barriers to entry for farming is designed to encourage more people to farm in Alaska and grow food here,” said Bjorkman.
Something else that SB 161, while it was inserted into SB 179, does is extend the tax expenditure or tax deferment from farm-use land to farm-use buildings.
“So, buildings that are used for the purposes of producing food here in Alaska they will now be assessed at the farm use rate and not the highest and true value of their assessment as they would get now that farm use buildings used to be assessed at the highest and best use or the fair and true value. But they now will be assessed at the farm use rate, which would be a tax cut for all of our farmers that have building intensive farms especially. So if they’re raising livestock, they’re storing hay, they’re using buildings to produce food that they grow. Those farmers can experience a tax break under this program,” said Bjorkman.
