2003 Legislation
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HOUSE BILL NO. 172 – Property tax/homeownr exmptn/adjust


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H0172..................................................by REVENUE AND TAXATION
PROPERTY TAX - Amends existing law to provide for certain annual adjustments
to the maximum amount subject to property tax exemption; to provide for
publication and dissemination of adjustments; and to provide that the
publication of adjustments shall be exempt from the provisions of the
Administrative Procedure Act.
02/06    House intro - 1st rdg - to printing
02/07    Rpt prt - to Rev/Tax

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 172
                             BY REVENUE AND TAXATION COMMITTEE
  1                                        AN ACT
  9    Be It Enacted by the Legislature of the State of Idaho:
 10        SECTION  1.  That  Section 63-602G, Idaho Code, be, and the same is hereby
 11    amended to read as follows:
 13    During  the  tax year 1983 and each year thereafter, subject to annual adjust-
 14    ment as provided herein, the first fifty thousand  dollars  ($50,000)  of  the
 15    market  value  for  assessment  purposes of residential improvements, or fifty
 16    percent (50%) of the market  value  for  assessment  purposes  of  residential
 17    improvements, whichever is the lesser, shall be exempt from property taxation.
 18    Beginning  for  tax  year 2005, the state tax commission shall publish adjust-
 19    ments to the maximum amount subject to property tax exemption to reflect cost-
 20    of-living fluctuations. The adjustments shall effect  changes  in  the  amount
 21    subject  to  tax exemption by a percentage equal as near as practicable to the
 22    annual cost-of-living percentage modification as determined by  the  secretary
 23    of  health and human services pursuant to 42 U.S.C. 415(i). The tax commission
 24    shall publish the adjustments required by this subsection each and every  year
 25    the secretary of health and human services announces said cost-of-living modi-
 26    fication.  The  adjustments shall be published no later than October 1 of each
 27    year and shall be effective for claims filed in and for the following property
 28    tax year. The publication of adjustments under this subsection shall be exempt
 29    from the provisions of chapter 52, title 67, Idaho Code, but shall be provided
 30    to each county and to members of the public upon request and without charge.
 31        (2)  The exemption allowed by this section may be granted only if:
 32        (a)  The residential improvements are owner-occupied and used as the  pri-
 33        mary  dwelling  place  of  the owner as of January 1, provided that in the
 34        event the residential improvements are owner-occupied after January 1  but
 35        before  April  15, the owner of the property is entitled to the exemption.
 36        The residential improvements may consist of part  of  a  multidwelling  or
 37        multipurpose  building  and shall include all of such dwelling or building
 38        except any portion used exclusively for anything other  than  the  primary
 39        dwelling of the owner. The presence of an office in an owner-occupied res-
 40        idential  property,  which office is used for multiple purposes, including
 41        business and personal use, shall not prevent the owner from  claiming  the
 42        exemption provided in this section; and
 43        (b)  The tax commission has certified to the board of county commissioners
  1        that  all  properties  in the county which are subject to appraisal by the
  2        county assessor have, in fact, been appraised uniformly so as to secure  a
  3        just valuation for all property within the county; and
  4        (c)  The owner has certified to the county assessor by April 15 that:
  5             (i)   He is making application for the exemption allowed by this sec-
  6             tion;
  7             (ii)  That  the  residential  improvements  are  his primary dwelling
  8             place; and
  9             (iii) That he has not made application in any other  county  for  the
 10             exemption,  and  has  not  made  application for the exemption on any
 11             other residential improvements in the county.
 12        (d)  For the purpose of this section, the definition of owner shall be the
 13        same definition set forth in section 63-701(7), Idaho Code.
 14             When an "owner," pursuant to the  provisions  of  section  63-701(7),
 15        Idaho Code, is any person who as grantor, or whose spouse as grantor, cre-
 16        ated a revocable or irrevocable trust and was named as beneficiary of that
 17        trust, or who is a partner of a limited partnership, a member of a limited
 18        liability  company, or shareholder of a corporation, he or she may provide
 19        proof of the trust, limited partnership,  limited  liability  company,  or
 20        corporation  with an affidavit stating: (i) the name of the grantor, part-
 21        ner, member or shareholder; (ii) a statement  that  the  grantor,  or  the
 22        grantor's  spouse,  is  the  beneficiary  of the trust, or the person is a
 23        partner of the limited partnership, or a member of the  limited  liability
 24        company,  or  a  shareholder  of  the  corporation; (iii) the grantor, the
 25        grantor's spouse, partner, member or shareholder is the  occupier  of  the
 26        residential  property  and uses the property as the primary dwelling place
 27        of the grantor, the grantor's spouse, partner, member or shareholder as of
 28        January 1; and (iv) if applicable, the person holds at least a  five  per-
 29        cent  (5%) ownership in the limited partnership, limited liability company
 30        or corporation.
 31             The affidavit shall include the attaching of the copies of those por-
 32        tions of the trust or other document which  set  forth  the  grantor,  the
 33        grantor  or  the grantor's spouse as beneficiary and the signature page of
 34        the trust or other document; those portions of the articles  of  organiza-
 35        tion  or  operating  agreement of the limited liability company indicating
 36        the person's membership in the company and the ownership  percentage  held
 37        by  such  person;  those  portions of the limited partnership agreement or
 38        other records of the limited partnership indicating that  the  person  has
 39        been admitted to the partnership and the ownership percentage held by such
 40        person; or those portions of the articles of incorporation indicating that
 41        the  person is a shareholder of the corporation and the ownership percent-
 42        age held by such person.
 43        (e)  Any owner may request in writing the return of all copies of any doc-
 44        uments submitted with the affidavit set forth in  paragraph  (d)  of  this
 45        subsection  that  are  held  by a county assessor, and the copies shall be
 46        returned by the county assessor upon submission of the affidavit in proper
 47        form.
 48        (f)  For the purpose of this section, the definition of "primary  dwelling
 49        place"  shall be the same definition set forth in section 63-701(8), Idaho
 50        Code.
 51        (g)  For the purpose of this section, the definition of  "occupied"  shall
 52        be the same definition set forth in section 63-701(6), Idaho Code.
 53        (3)  An  owner  need  only make application for the exemption described in
 54    subsection (1) of this section once, as long as all of  the  following  condi-
 55    tions are met:
  1        (a)  The  owner  has  received the exemption during the previous year as a
  2        result of his making a valid application as defined in  subsection  (2)(c)
  3        of this section.
  4        (b)  The  owner  or beneficiary, partner, member or shareholder, as appro-
  5        priate, still occupies the same residential  improvements  for  which  the
  6        owner made application.
  7        (c)  The  residential  improvements described in subsection (3)(b) of this
  8        section  are owner-occupied or occupied by a beneficiary, partner,  member
  9        or  shareholder, as appropriate, and used as the primary dwelling place of
 10        the owner or beneficiary, partner, member or shareholder, as  appropriate,
 11        as  of  January  1;  provided  however,  that in the event the residential
 12        improvements are owner-occupied after January 1, but before April 15,  the
 13        owner of the property is entitled to the exemption.
 14        (4)  The exemption allowed by this section must be taken before the reduc-
 15    tion  in  taxes  provided  by  sections  63-701 through 63-710, Idaho Code, is
 16    applied.
 17        (5)  The legislature declares that this exemption is necessary and just.
 18        (6)  Residential improvements having previously  qualified  for  exemption
 19    under  this  section  in the preceding year, shall not lose such qualification
 20    due to  the  owner's,  beneficiary's,  partner's,  member's  or  shareholder's
 21    absence  in  the current year by reason of active military service in a desig-
 22    nated combat zone, as defined in section 112 of the Internal Revenue Code.  If
 23    an  owner  fails  to  timely  apply  for exemption as required in this section
 24    solely by reason of active duty in a designated combat zone by the owner, ben-
 25    eficiary, partner, member or shareholder, as appropriate, as defined  in  sec-
 26    tion 112 of the Internal Revenue Code, and such improvements would have other-
 27    wise  qualified  under this section, then the board of county commissioners of
 28    the county in which the residential  improvements  are  located  shall  refund
 29    property  taxes, if previously paid, in an amount equal to the exemption which
 30    would otherwise have applied.
 31        SECTION 2.  This act shall be in full force and effect on and after  Janu-
 32    ary 1, 2004.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE
                            RS 12571
The purpose of this legislation is to provide for an annual cost of
living adjustment on the $50,000 upper limit of the homeowner property
tax exemption. The percentage used for adjustment would match that used
for the income threshold for the circuit breaker, the national Consumer
Price Index. If the CPI was two percent in the first year, the upper
limit on the exemption would increase by $1,000. There would be no
change in the percentage of the exemption, 50 percent of the assessed
value of residential improvements. Residential values have been rising
faster than the values of other kinds of property. Once the homeowner
reaches the upper limit, at about $120,000 market value, there is no
longer mitigation for inflation. So taxes increase at an accelerated
rate. Since 1990, total residential property taxes in Idaho have
increased by 164.5 percent while the total for all non-residential
property has increased by 77.3 percent. The current maximum homeowner s
exemption was established in 1983 and has never been adjusted for

                         FISCAL IMPACT
There would be no fiscal impact on the general fund. Cities, counties
and other local taxing districts could collect the same amount under
the budget cap. Annual increases in property tax collections going to
schools as a result of inflation in residential values would be less
than without this change. If the market value of a home affected by
this change increases by five percent, the increase in taxable value
would be $5,500 rather than $6,500 and the increase in money for
schools would be $16.50 rather than $19.50. If it increases by 10
percent, the increase for schools would be $33 rather than $39.

            Name: Sen. Fred Kennedy
                  Phone:     332-1348
                  Name: Rep. Charles Cuddy
                  Phone:     332-1235
      STATEMENT OF PURPOSE/FISCAL NOTE                      H 172