Legislators consider raising property transfer tax to create more supportive housing

Nevadans may see a tax on property transfers go up as a way to boost housing options for people with behavioral, mental and physical disabilities, although the proposal faces an uphill climb because it needs bipartisan support in the Legislature.

On Tuesday, legislators are set to discuss SB68  — a bill sponsored by the Clark County Regional Behavioral Health Policy Board that would raise real property transfer taxes statewide by 20 cents per $500 of value. The funds would bolster supportive housing — defined as affordable housing that costs no more than one-third of the tenant’s income, with wraparound services included. 

Those services could include substance use disorder recovery services, mental health support and flexible employment opportunities. In some instances, supportive housing could act as a step to transition out of homelessness or assist with permanent supportive housing.

According to the Nevada State Apartment Association, rents have risen 15.3 percent in Northern Nevada and 26.2 percent in Southern Nevada since 2020, creating an affordability crunch. Stable housing for those with behavioral, mental and physical disabilities can be even harder to manage if they are not only dealing with high rents, but also difficulties accessing mental health and other services. 

Sarah Adler, the lobbyist for the Nevada chapter of the National Alliance on Mental Illness (or NAMI), said though nationwide supportive housing is focusing on providing stable housing for the unhoused population, it is also used for people with disabilities who wish to live independently.

“These folks are right now living with, supported by their families. But all of us at my and your parents’ age and generation, we’re aging, and we know we won’t be able to sustain our loved ones forever,” Adler said in an interview before the hearing. “We are seeking permanent supportive housing for our loved ones before we pass away and they become homeless.” 

Though SB68 would raise taxes, and thus require a two-thirds supermajority of legislators to pass, Adler said she had received only a small degree of pushback on the bill.

But Nevada REALTORS President Tom Blanchard said in a press release that the group — which is a major campaign donor to many legislators — is opposed to any increase in the state’s real property transfer tax.

“[Nevada REALTORS’] primary goal will be to protect homeowners, especially first-time home buyers, who are least able to afford any proposed increase in such taxes,” the statement said. 

Nevada’s real property transfer tax is set at a statewide base value of $1.95 for each $500 of value on transfer transactions, though some counties have a higher rate. Clark County has the highest transfer tax in the state, at $2.55 per $500 of value on transfer transactions, or about one-half of 1 percent. 

However, an investigation from the Las Vegas Review-Journal last year found many of the largest real estate sales involving casinos or other major properties used limited liability companies to skirt paying any transfer taxes through exceptions laid out in state law.

A tax increase would also need support from Republican Gov. Joe Lombardo, who said before taking office that the state’s budget surplus means “there is no need for a tax increase of any sort.”

“Governor Lombardo and Sheriff Lombardo have both said frequently that they know incarceration is not the answer to mental illness and addiction. I believe that when members of the Legislature and Governor Lombardo have the opportunity to be exposed to SB68, they will understand that, right, incarceration is not the answer, and, in fact, it’s a very expensive alternative to supportive housing,” she said.

According to a fiscal note provided by the Nevada Housing Division, the 20 cent tax raise envisioned by SB68 would result in an estimated $14.3 million in new tax revenue in the 2023-24 fiscal year, and $19.1 million in the next fiscal year.

Adler said that though SB68 would fill in the gaps in revenue for supportive housing, it will be one part of many organizations working together to provide supportive, affordable housing to those who need it.

“But we will make a very significant dent in the need,” Adler said. “Every single unit of supportive housing that we can create creates the opportunity for a safe and dignified life for that individual.”

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