NH House panel weighs property tax breaks for accessory dwelling units

But bill backed by affordable housing advocates receives lukewarm reception

If you rent out your mother-in-law apartment to a stranger you could not only get rent, but a property tax break under a proposed bill attempting to add more affordable units to New Hampshire’s housing stock.

Under House Bill 1510, municipalities would be able to provide a tax exemption on accessory dwelling units, or ADUs, built or occupied after January 2021 and leased to non-family members.

ADUs are an addition to a home with a separate kitchen and bathroom that could be occupied by anybody. Before June 2017, many municipalities wouldn’t allow them, or at least made it difficult to have one, but a law enacted at the time required local zoning ordinances to allow them. It was pushed by a coalition of affordable housing groups, advocates for the elderly, homebuilders and Realtors.

Rep. Harrison Kanzler, D-North Conway, sees his bill as further encouraging ADUs to increase the supply of a rental housing market, which currently has a statewide vacancy rate at 1%.

“The spirit behind this bill is to promote the construction of ADUs, increasing the value of the owner’s property, while also providing new housing units for long term renting, and not increasing the property tax assessment on the owner’s property,” he told NH Business Review in an email.

But questions at Tuesday’s hearing of the House Municipal and County Government Committee were more about the letter of the law than the spirit.

If this was supposed to be providing affordable housing, what about that person with the $5 million house and a $2 million addition, asked one committee member.

“I think it would be used by most people not on a luxury apartment, but on a much smaller scale,” Kanzler said, adding he would be amendable to an amendment that would place some limitations to prevent large property tax breaks.

Rep. Max Abramson, L-Seabrook, thought there might be another loophole, because of the large amount of duplex condos in his area. Wouldn’t that law not just allow for a tax break on a small apartment, but a property tax break on half of the property, he asked

And Margaret Byrnes, executive director of the New Hampshire Municipal Association, testified that it would be difficult for towns to decide who is a non-family member, and more importantly, the municipalities have nothing to gain by this, and only revenue to lose.

“Wouldn’t it discourage towns from wanting to approve ADUs?” Abramson asked later.

But not every comment was critical of the measure.

“I get an apartment built above my garage for my family. And if I later rent it to a stranger it will be tax-exempt on what I spent to add the ADU,” Susan Treleaven, D-Dover. “So this may encourage me to do it and add to the housing supply.”