Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

As a result of the Merger described in Footnote 4, and effective April 20, 2024, the Company is included in the Sekisui House US Holdings ("SHUSH") (parent of SH Residential Holdings, LLC) consolidated tax group for U.S. federal income tax purposes. Although the Company’s post-merger results are included in the SHUSH consolidated return, our income tax provision is calculated primarily as though we were a separate taxpayer for the full year. However, under certain circumstances, transactions between the Company and SHUSH are assessed using consolidated tax return rules and any difference in liability between the separate company method will be addressed in a future tax sharing arrangement.

Our overall effective income tax rates were 14.2% and 21.8% for the three and nine months ended September 30, 2024 and 23.2% and 22.2% for the three and nine months ended September 30, 2023, respectively. The rates for the three and nine months ended September 30, 2024 resulted in an income tax expense of $22.1 million and $70.8 million, respectively, compared to $32.5 million and $80.3 million for the three and nine months ended September 30, 2023, respectively. The year-over-year decrease in the effective tax rates for the three and nine months ended September 30, 2024, is primarily due to deductible executive compensation, partially offset by non-deductible transaction costs and excise taxes as well as a tax reserve related to the Merger.