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H0532...............................................by REVENUE AND TAXATION
REAL ESTATE TRANSFER TAX - Amends and adds to existing law to provide that
voters in a county may authorize a residential real estate transfer tax in
that county.
02/01 House intro - 1st rdg - to printing
02/02 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 532
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO THE TRANSFER OF RESIDENTIAL REAL ESTATE; AMENDING TITLE 63, IDAHO
3 CODE, BY THE ADDITION OF A NEW CHAPTER 18, TITLE 63, IDAHO CODE, TO PRO-
4 VIDE A SHORT TITLE, TO DEFINE TERMS, TO PROVIDE THAT VOTERS IN A COUNTY
5 MAY AUTHORIZE A RESIDENTIAL REAL ESTATE TRANSFER TAX IN THAT COUNTY, TO
6 PROVIDE THE PERCENTAGE OF VOTERS REQUIRED FOR SUCH AUTHORIZATION, TO PRO-
7 VIDE ADMINISTRATIVE REQUIREMENTS, TO PROVIDE FOR INITIATION OF AN ELECTION
8 FOR A COUNTY RESIDENTIAL REAL ESTATE TRANSFER TAX, TO PROVIDE AN EFFECTIVE
9 DATE, TO IMPOSE A RESIDENTIAL REAL ESTATE TRANSFER TAX IF AUTHORIZED, TO
10 PROVIDE EXEMPTIONS TO THE RESIDENTIAL REAL ESTATE TRANSFER TAX, TO PROVIDE
11 COLLECTION PROCEDURES AND TO PROVIDE PENALTIES AND ENFORCEMENT; AMENDING
12 CHAPTER 6, TITLE 55, IDAHO CODE, BY THE ADDITION OF NEW SECTIONS 55-616,
13 55-617, 55-618, 55-619, 55-620, 55-621 AND 55-622, IDAHO CODE, TO PROVIDE
14 A SHORT TITLE, TO PROVIDE A PURPOSE, TO DEFINE TERMS, TO PROVIDE FOR A
15 REPORT OF TRANSFERS OR CHANGE OF OWNERSHIP RECORDS, TO PROVIDE FOR PROP-
16 ERTY TRANSFER CERTIFICATES, TO PROVIDE FOR EXEMPTIONS TO THE PROPERTY
17 TRANSFER CERTIFICATE REQUIREMENT AND TO PROVIDE FOR A RESTRICTION ON THE
18 DISCLOSURE OF INFORMATION; AND AMENDING SECTION 55-805, IDAHO CODE, TO
19 REQUIRE THAT A PROPERTY TRANSFER CERTIFICATE MUST BE DELIVERED TO THE
20 OFFICE OF THE COUNTY RECORDER AND TO MAKE A TECHNICAL CORRECTION; AND PRO-
21 VIDING SEVERABILITY.
22 Be It Enacted by the Legislature of the State of Idaho:
23 SECTION 1. That Title 63, Idaho Code, be, and the same is hereby amended
24 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
25 ter 18, Title 63, Idaho Code, and to read as follows:
26 CHAPTER 18
27 COUNTY OPTION RESIDENTIAL REAL ESTATE TRANSFER TAX
28 63-1801. SHORT TITLE. This chapter shall be known and may be cited as the
29 "Local Option Residential Real Estate Transfer Tax Act."
30 63-1802. DEFINITIONS. For purposes of this chapter:
31 (1) "Consideration" means the greater of either actual cash paid or con-
32 tracted to be paid or fair market value of the residential real property
33 transferred and shall include the amount of any liens, mortgage, contract
34 indebtedness or other encumbrance, either given to secure the purchase price,
35 or any part thereof, remaining unpaid on the residential real property at the
36 time of transfer, and shall include value of residential real property deliv-
37 ered or contracted to be delivered. Consideration does not include the amount
38 of any outstanding lien or encumbrance in favor of the United States, the
39 state of Idaho, or of a municipal or quasi-municipal governmental corporation
40 or district for taxes, special benefits or improvements.
41 (2) "Person" means and includes an individual, corporation, partnership
2
1 or other business organization, trust, fiduciary, or agent or any other party
2 presenting a conveyance document for recordation pursuant to chapter 8, title
3 55, Idaho Code.
4 (3) "Residential real estate transfer tax" means a nonproperty tax on the
5 consideration for any residential real property transferred in this state at
6 the rate established in section 63-1803, Idaho Code.
7 (4) "Tax commission" means the state tax commission.
8 (5) "Transfer" means any conveyance of title to residential real prop-
9 erty, or any estate or interest therein, for a consideration, and any contract
10 for such conveyance. The term also includes the grant, assignment, quitclaim,
11 sale or transfer of improvements constructed upon leased land. The term
12 "transfer" also includes the transfer or acquisition within any twelve (12)
13 month period of a controlling interest in any entity with an interest in resi-
14 dential real property located in this state for a consideration. For purposes
15 of this subsection all acquisitions by persons acting in concert shall be
16 aggregated for purposes of determining whether a transfer or acquisition of a
17 controlling interest has taken place. The state tax commission shall promul-
18 gate rules to determine when persons are acting in concert. In adopting a rule
19 for this purpose, the state tax commission shall consider the following:
20 (a) Persons shall be treated as acting in concert when they have a rela-
21 tionship with each other such that one (1) person influences or controls
22 the actions of another through common ownership; and
23 (b) When persons are not commonly owned or controlled, they shall be
24 treated as acting in concert only when the unity, with which the pur-
25 chasers have negotiated and will consummate the transfer of ownership
26 interest, supports a finding that they are acting as a single entity. If
27 the acquisitions are completely independent, with each purchaser buying
28 without regard to the identity of the other purchasers, then the acquisi-
29 tions shall be considered separate acquisitions.
30 63-1803. AUTHORITY FOR VOTERS TO APPROVE COUNTY RESIDENTIAL REAL ESTATE
31 TRANSFER TAX. The voters of any county may authorize their county to adopt,
32 implement and collect a residential real estate transfer tax not to exceed one
33 percent (1%) as provided in this chapter for a period not in excess of ten
34 (10) years. The authorization to adopt, implement and collect a county resi-
35 dential real estate transfer tax, must be made by the voters of the county at
36 an election, held on a date provided in section 34-106, Idaho Code, and sixty-
37 six and two-thirds percent (66 2/3%) of the votes cast on the question shall
38 be necessary to authorize the tax. The election at which the question is posed
39 may be a part of any other special or general county election and shall be
40 held on a date provided in section 34-106, Idaho Code.
41 63-1804. GENERAL PROVISIONS. In any election held on a date provided in
42 section 34-106, Idaho Code, the ordinance submitted to the county voters
43 shall: (1) state the exact rate of the tax and the type of tax; and (2) state
44 the duration of the tax. No rate shall be increased and no duration shall be
45 extended without the approval of the voters, by the same sixty-six and two-
46 thirds percent (66 2/3%) of the votes cast as required in section 63-1803,
47 Idaho Code. Any ordinance adopting a county residential real estate transfer
48 tax shall conform to the provisions of this chapter. Any county adopting a
49 residential real estate transfer tax may contract with the state tax commis-
50 sion for the collection, distribution and administration of such tax. All rev-
51 enues received from any county residential real estate transfer tax shall con-
52 stitute revenue of the county imposing the tax, and a minimum of fifty percent
53 (50%) shall be county property tax relief and the remainder shall be avail-
3
1 able for one-time capital expenditures. The amount initially collected for
2 property tax relief shall not be reduced. Any county adopting an ordinance
3 pursuant to this chapter shall, immediately following approval of such ordi-
4 nance or any amendment thereto, forward a copy of the ordinance or amendment
5 to the state controller and to the chairman of the state tax commission at
6 least one hundred twenty (120) days prior to the effective date of the tax.
7 The state tax commission may adopt rules necessary to carry out the provisions
8 of this act including, but not limited to, the provisions of the county ordi-
9 nance imposing such tax.
10 63-1805. INITIATION OF ELECTION. (1) An election to approve or disapprove
11 the adoption of a county residential real estate transfer tax may be called
12 for by:
13 (a) The adoption of a residential real estate transfer tax ordinance by
14 sixty-six and two-thirds percent (66 2/3%) of the board of county commis-
15 sioners; or
16 (b) If a petition signed by not less than ten percent (10%) of the regis-
17 tered voters is presented to the board of county commissioners calling for
18 an election, the board must adopt an ordinance referring a county residen-
19 tial real estate transfer tax to the voters.
20 (2) Any ordinance adopted must provide for referring the question of the
21 approval or disapproval of the county residential real estate transfer tax to
22 the voters of the county on a date provided in section 34-106, Idaho Code.
23 63-1806. DATE OF EFFECT. All ordinances providing for the adoption,
24 implementation and collection of county residential real estate transfer tax
25 shall provide that the date of implementation shall be the beginning of the
26 fiscal year of the county.
27 63-1807. RATE OF TAX. If approved by the voters a residential real
28 estate transfer tax is hereby imposed on the transferor at a rate not in
29 excess of one percent (1%), or such other lesser amount approved by the
30 voters, of the consideration paid on any residential real estate transferred
31 and subject to the transfer tax.
32 63-1808. EXEMPTIONS. Any residential real estate transfer tax imposed in
33 this chapter does not apply to:
34 (1) A mortgage or other transfer of an interest in residential real prop-
35 erty merely to secure a debt, or the assignment thereof.
36 (2) A transfer of title to or from the United States, any territory or
37 state or any agency, department, instrumentality or political subdivision
38 thereof.
39 (3) A transfer of title from a trust to the beneficiary or beneficiaries
40 of the trust.
41 (4) A transfer of title between spouses, including gifts.
42 (5) A transfer of title between former spouses in compliance with the
43 decree of divorce.
44 (6) Transfers, assignments or conveyances of unpatented mines or mining
45 claims.
46 (7) A transfer, assignment or other conveyance of residential real prop-
47 erty to a corporation or other business organization if the person conveying
48 the residential real property owns one hundred percent (100%) of the corpora-
49 tion or organization to which the conveyance is made.
50 (8) A gift, devise or inheritance of residential real property.
51 (9) The making, delivering or filing of conveyances of residential real
4
1 property to make effective any plan of reorganization or adjustment:
2 (a) Confirmed under the bankruptcy act, as amended, title 11 of U.S.C.;
3 (b) Approved in an equity receivership proceeding involving a corpora-
4 tion, as defined in the bankruptcy act; or
5 (c) Whereby a mere change in identity, form or place or organization is
6 effected, such as a transfer between a corporation and its parent corpora-
7 tion, a subsidiary or an affiliated corporation, if the making, delivering
8 or filing of instruments of transfer or conveyance occurs within five (5)
9 years after the date of the confirmation, approval or change.
10 (10) The exchange of residential real property held for productive use in
11 a trade or business or for investment if such property is exchanged solely for
12 property of like kind which is to be held either for productive use in a trade
13 or business or for investment, and if such exchange qualifies as a nontaxable
14 exchange pursuant to 26 U.S.C., section 1031.
15 (11) A single family dwelling whose price is less than the median price
16 for single family dwellings as determined by the state tax commission annually
17 by rule.
18 63-1809. COLLECTION OF RESIDENTIAL REAL ESTATE TRANSFER TAX. (1) If any
19 deed, instrument or writing evidencing a transfer of title subject to the res-
20 idential real estate transfer tax is offered for recordation, the county
21 recorder of any county shall compute the amount of tax due thereon, collect
22 the residential real estate transfer tax and transmit the residential real
23 estate transfer tax to the state tax commission for deposit in the county cur-
24 rent expense fund and shall be utilized equally for a dollar for dollar reduc-
25 tion of property tax collected by the county and for any other lawful purpose.
26 (2) Each deed, instrument or writing evidencing a transfer of title of
27 residential real property which is subject to the residential real estate
28 transfer tax and which is presented for recordation to the county recorder of
29 any county must be accompanied by a declaration of consideration signed by the
30 buyer. Each deed, instrument or writing evidencing a transfer of title of res-
31 idential real property which is exempt pursuant to this section, and which is
32 presented for recordation to the county recorder of any county must be accom-
33 panied by a declaration that the residential real property is exempt under the
34 provisions of this chapter signed by the grantee on a form prescribed by the
35 state tax commission.
36 (3) The county recorder of any county shall not accept for recordation
37 any deed, instrument or writing if the residential real estate transfer tax
38 has not been paid, or if not accompanied by a form declaring the residential
39 real property exempt from the provisions of this chapter.
40 (4) Any levy set to fund any portion of the county's budget shall be cal-
41 culated based on the budget subject to the limitations of section 63-802,
42 Idaho Code, less the money to be received from the tax imposed by this chapter
43 for property tax relief.
44 63-1810. PENALTIES AND ENFORCEMENT. (1) Any person who has residential
45 real property transferred to them shall be required to offer the deed, instru-
46 ment or writing evidencing the title for recordation with the county recorder
47 of the county where the residential real property is located within five (5)
48 days after the transfer has occurred. Any person who is required to record
49 such transfer pursuant to this subsection and does not do so, shall be guilty
50 of a misdemeanor.
51 (2) Any person who willfully and falsely declares a value of transferred
52 residential real property or willfully and falsely declares that transferred
53 residential real property is exempt from the provisions of this chapter pursu-
5
1 ant to section 63-1808, Idaho Code, is guilty of a misdemeanor. In addition to
2 the penalties for this misdemeanor, any such person shall pay the amount of
3 additional tax required on account of the falsification or declaration of
4 exemption and a civil penalty of five hundred dollars ($500) for each falsifi-
5 cation or declaration of exemption. All such penalties shall be remitted to
6 the general fund.
7 (3) The residential real estate transfer tax, interest and/or penalties
8 due thereon shall be a specific lien upon each piece of residential real prop-
9 erty sold from the time of the sale until the tax shall have been paid, which
10 lien may be enforced in the manner prescribed for the foreclosure of mort-
11 gages.
12 (4) The tax commission may, at its option, enforce the obligation through
13 a criminal misdemeanor action, an action of debt against the buyer of the res-
14 idential real property or may proceed in the manner prescribed for the fore-
15 closure of mortgages. A resort to one (1) course of enforcement shall not be
16 an election not to pursue the other. All remedies available to the tax commis-
17 sion in enforcing the provisions of chapter 36, title 63, Idaho Code, shall be
18 available to them in enforcing the provisions of this chapter.
19 SECTION 2. That Chapter 6, Title 55, Idaho Code, be, and the same is
20 hereby amended by the addition thereto of NEW SECTIONS, to be known and desig-
21 nated as Sections 55-616, 55-617, 55-618, 55-619, 55-620, 55-621 and 55-622,
22 Idaho Code, and to read as follows:
23 55-616. SHORT TITLE. Sections 55-616 through 55-622, Idaho Code, may be
24 cited as the "Residential Real Property Transfer Act."
25 55-617. PURPOSE. The purpose of this act is to obtain sales price data
26 necessary to the determination of statewide and local levels and uniformity of
27 residential real property assessment by the most efficient, economical, reli-
28 able and fairest method, in order to comply with the fairness dictates of the
29 Idaho constitution. However, it is the intention of the legislature that the
30 demands of individual privacy be respected and protected in the process, and
31 that violations be prosecuted within the full extent of existing criminal law.
32 Further, it is the absolute intent of the legislature that such information
33 shall not be used for the assessment or collection of either a transfer tax or
34 an excise tax by the state tax commission or local subdivisions of government.
35 55-618. DEFINITIONS. As used in this act:
36 (1) "Partial interest" means a percentage interest in residential real
37 property when less than one hundred percent (100%).
38 (2) "Person" means and includes an individual, corporation, partnership
39 or other business organization, trust, fiduciary, or agent or any other party
40 presenting a conveyance document for recordation pursuant to chapter 8, title
41 55, Idaho Code.
42 (3) "Residential real property" includes:
43 (a) Land;
44 (b) Buildings or structures;
45 (c) Fixtures, fences and improvements affixed to land.
46 (4) "Residential real property transfer certificate" means a fill in the
47 blank form designated by the state tax commission for statewide use by all
48 county assessors, and which allows the person making the certification to
49 declare the value exchanged in the transfer or state that the transfer is
50 exempt from disclosure of the value as provided for in section 55-621, Idaho
51 Code, without further explanation.
6
1 (5) "Transfer" means an act of the parties or of the law in which title
2 to residential real property or an equitable interest in residential real
3 property is conveyed from one (1) person to another.
4 (6) "Value" means the amount of the full actual consideration attribut-
5 able to residential real property therefor paid or to be paid, including the
6 amount of any lien or liens thereon.
7 55-619. REPORT OF TRANSFERS -- CHANGE OF OWNERSHIP RECORDS. (1) All
8 transfers of residential real property, including the transfer of a partial
9 interest, executed by the grantor after July 1, 2006, shall be reported to the
10 office of the county assessor in the county in which the residential real
11 property is located on a residential real property transfer certificate as
12 defined in section 55-618, Idaho Code, and required in section 55-620, Idaho
13 Code, by delivering the residential real property transfer certificate to the
14 office of the county recorder along with the conveyance document to be
15 recorded as described in section 55-620, Idaho Code.
16 (2) No agent of the county shall change any ownership records used for
17 the assessment or taxation of residential real property unless the county has
18 received a residential real property transfer certificate as defined in sec-
19 tion 55-618, Idaho Code, and as provided for in section 55-620, Idaho Code.
20 55-620. RESIDENTIAL REAL PROPERTY TRANSFER CERTIFICATE. (1) At least one
21 (1) person who is a party to residential real property transfer shall cause to
22 be delivered to the county recorder at the time of presenting a conveyance
23 document for recording, a residential real property transfer certificate
24 declaring the consideration paid for the residential real property transferred
25 or claiming an exemption from disclosure.
26 (2) No instrument of conveyance executed by the grantor after July 1,
27 2006, and evidencing a transfer of residential real property may be accepted
28 for recordation pursuant to chapter 8, title 55, Idaho Code, until the resi-
29 dential real property transfer certificate has been received by either the
30 county recorder or the county assessor. The validity or effectiveness of a
31 conveyance instrument shall not be affected by the failure to comply with the
32 provisions of this act.
33 55-621. RESIDENTIAL REAL PROPERTY TRANSFER CERTIFICATE -- EXEMPTIONS. The
34 disclosure of value required in section 55-620, Idaho Code, shall not apply
35 to:
36 (1) An instrument executed by the grantor prior to July 1, 2006;
37 (2) The United States of America, this state, or any instrumentality,
38 agency or subdivision thereof;
39 (3) An instrument which, without added consideration, confirms, corrects,
40 modifies or supplements a previously recorded instrument;
41 (4) A transfer pursuant to court decree;
42 (5) A transfer pursuant to mergers, consolidations or reorganizations of
43 corporations, partnerships or other business entities;
44 (6) A transfer of decedent's estate;
45 (7) A transfer by gift;
46 (8) A transfer between husband and wife or parent and child with only
47 nominal actual consideration therefor;
48 (9) An instrument, the effect of which is to transfer the residential
49 real property to the same party or parties;
50 (10) A sale for delinquent taxes or assessments, sheriff sale, bankruptcy
51 action or mortgage foreclosure;
52 (11) A transfer which creates only a leasehold estate in the grantee; or
7
1 (12) A deed of trust, mortgage, assignment of buyer's or seller's rights
2 under a residential real estate contract for security purposes, assignment of
3 lessor's or lessee's rights under leases for security purposes, assignment of
4 rents or other instruments or agreements designed to grant a lien or security
5 interest in residential real property or fixtures.
6 55-622. DISCLOSURE OF INFORMATION RESTRICTED. The certificate required in
7 this act and the information therein shall not be a public record and shall be
8 held confidential by the county recorder and county assessor, and used for
9 purposes of appraisal and property taxation and for collection purposes pursu-
10 ant to chapter 18, title 63, Idaho Code. The foregoing shall not apply to com-
11 pilations from such certificates or to summaries, analyses and evaluations
12 based upon such compilations, that are nonpersonal in nature, designed to dis-
13 close raw data, and necessary for property tax administration, and which may
14 be released to Idaho licensed or certified appraisers. Otherwise, the disclo-
15 sure of such information by a county official shall be a misdemeanor.
16 SECTION 3. That Section 55-805, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 55-805. ACKNOWLEDGMENT AND CERTIFICATION NECESSARY TO AUTHORIZE RECORD-
19 ING. Before an instrument may be recorded, unless it is otherwise expressly
20 provided, its execution must be acknowledged by the person executing it, or if
21 executed by a corporation, by its president or vice president, or secretary or
22 assistant secretary, or other person executing the same on behalf of the cor-
23 poration, or if executed in the name of the state of Idaho or any county,
24 political subdivision, municipal, quasi-municipal, or public corporation, by
25 one (1) or more of the officers of such state, county, political subdivision,
26 municipal, quasi-municipal, or public corporation executing the same, or if
27 executed in a partnership name, by one (1) or more of the partners who sub-
28 scribed the partnership name thereto, or if executed by a limited liability
29 company, by the manager, member or other person executing the same on behalf
30 of the limited liability company, or the execution must be proved and the
31 acknowledgment or proof, certified in substantially the manner prescribed by
32 chapter 7, title 55, Idaho Code; provided, that if such instrument shall have
33 been executed and acknowledged in any other state or territory of the United
34 States, or in any foreign country, according to the laws of the state, terri-
35 tory or country wherein such acknowledgment was taken, the same shall be enti-
36 tled to record, and a certificate of acknowledgment indorsed endorsed upon or
37 attached to any such instrument purporting to have been made in any such
38 state, territory or foreign country, shall be prima facie sufficient to enti-
39 tle the same to such record and the residential real property transfer certif-
40 icate as provided in chapter 6, title 55, Idaho Code, must be delivered to the
41 office of the county recorder.
42 SECTION 4. SEVERABILITY. The provisions of this act are hereby declared
43 to be severable and if any provision of this act or the application of such
44 provision to any person or circumstance is declared invalid for any reason,
45 such declaration shall not affect the validity of the remaining portions of
46 this act.
STATEMENT OF PURPOSE
RS15801C2
This legislation provides for a local option real estate transfer
tax. Implementation and collection requires a 66 2/3% vote to
not exceed 10 years on a consolidated election date. The tax may
not exceed 1% of the sales price. Disclosure is required as a
prerequisite for this act. The legislation exempts residential
homes under the state median price. Revenues are targeted 50%
for property tax relief and capitol 50% for one time
expenditures.
FISCAL NOTE
This tax creates property tax relief and new revenue for rapidly
growing counties experiencing high volume residential sales
activity. Actual amounts depend on the county.
Contact
Name: Representative Wendy Jaquet
Phone: 332-1130
STATEMENT OF PURPOSE/FISCAL NOTE H 532