HELENA (LEE)--A Missoula legislator on Tuesday called for imposing a tax on the sales of certain real estate costing more than $500,000 and using the proceeds to help fund a revolving affordable housing loan fund for Montanans.

Rep. Ron Erickson, D-Missoula, told the House Taxation Committee that most states already have a realty transfer tax. His House Bill 552 would impose a 1 percent tax on sales of certain property topping $500,000 and provides for a $500,000 deduction.

If someone sold a $1 million home, the tax would be $5,000 -- $1 million minus $500,000 equals $500,000, which is multiplied by .01.

Agricultural land sales would be exempt if the land remained in agricultural use under the new owner, Erickson said.

The Revenue Department estimated the tax would raise $14 million a year, all of which would go into the underfunded affordable housing loan account established in 1999 to help Montanans get housing.

"Mr. Chairman, we're desperate," Erickson said. "What we have before us is an act of desperation."

Supporting the bill was Judy Smith of HomeWORD, which builds and develops affordable housing in Missoula and Billings for middle- and low-income people. Smith said wages in Montana have been stagnant, while housing costs have skyrocketed.

Thirty-eight states have affordable housing trust funds, she said, but Montana is one of the few that doesn't put any money into it. With $14 million a year from Erickson's bill, it could finance loans for 1,000 new or renovated housing units over two years, she said.

The bill drew opposition from the Montana Association of Realtors, Stockgrowers Association, Farm Bureau Federation, Grain Growers Association , Taxpayers Association, Chamber of Commerce and Building Industry Association.

Joe Roberts, representing the Realtors, said the group has consistently opposed a realty transfer tax because "it is not in the best interest of the state and homeowners in the state."

He said the association shares Erickson's concern for affordable housing, but this wasn't the way to do it. Roberts warned that the realty-transfer tax starts out small but could be increased and the $500,000 exemption could be lowered in future sessions.

Lobbyists from agricultural groups questioned how the ag-land exemption would work.

"How is the seller to know what the new owner intends to do with the land?" asked Steve Pilcher of the Stockgrowers Association.

Mary Whittinghill of the Taxpayers Association said a realty-transfer tax is just another selective sales tax, and Montana already ranks fourth nationally in this category.

The committee took no immediate action on HB552.