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H0264...............................................by REVENUE AND TAXATION
PROPERTY TAX - Adds to existing law to exempt from the property tax any
increase in excess of three percent per year in the net taxable value of
real property or operating property of a taxpayer; to define terms; to
provide the effect of a change in status; to provide that tax year 2004 is
the base year for calculation; and to provide that the exemption does not
apply to forest lands.
03/02 House intro - 1st rdg - to printing
03/05 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 264
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO PROPERTY TAX; AMENDING CHAPTER 6, TITLE 63, IDAHO CODE, BY THE
3 ADDITION OF A NEW SECTION 63-602JJ, IDAHO CODE, TO EXEMPT FROM THE PROP-
4 ERTY TAX ANY INCREASE IN EXCESS OF THREE PERCENT PER YEAR IN THE NET TAX-
5 ABLE VALUE OF REAL PROPERTY OR OPERATING PROPERTY OF A TAXPAYER, TO PRO-
6 VIDE TAX YEAR 2004 AS THE BASE YEAR, TO PROVIDE THE EFFECT OF A CHANGE OF
7 TAX STATUS OR TAX EXEMPTION, TO PROVIDE DEFINITIONS, TO PROVIDE PROCEDURES
8 FOR PERSONS ACTING IN CONCERT, TO PROVIDE THAT THE PROPERTY INCLUDED IN
9 THE CALCULATION OF THE EXEMPTION SHALL INCLUDE EACH PARCEL OF REAL PROP-
10 ERTY OWNED BY THE TAXPAYER, TO PROVIDE WHEN A SALES OR TRANSFER SHALL NOT
11 BE DEEMED TO HAVE OCCURRED, TO PROVIDE CIRCUMSTANCES WHEN PROPERTY
12 ACQUIRES A NEW TAXABLE VALUE, TO PROVIDE THAT THE EXEMPTION DOES NOT APPLY
13 TO FOREST LANDS, TO PROVIDE THAT THE LEGISLATURE DECLARES THE EXEMPTION
14 NECESSARY AND JUST AND TO PROVIDE FOR RULES; DECLARING AN EMERGENCY AND
15 PROVIDING RETROACTIVE APPLICATION.
16 Be It Enacted by the Legislature of the State of Idaho:
17 SECTION 1. That Chapter 6, Title 63, Idaho Code, be, and the same is
18 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
19 ignated as Section 63-602JJ, Idaho Code, and to read as follows:
20 63-602JJ. PROPERTY EXEMPT FROM TAXATION -- NET TAXABLE VALUE INCREASES
21 ABOVE A CERTAIN PERCENTAGE. (1) Any increase in excess of three percent (3%)
22 per year in the the net taxable value of real property or operating property,
23 based on the property's taxable value for tax year 2004, shall be exempt from
24 property taxation and any special assessment as long as the taxpayer continues
25 to own the property and the property continues to maintain its tax exemption
26 or tax status. If a property's tax exemption or tax status changes during a
27 year, the owner of the property shall be liable to have the property valued
28 and taxed according to fair market value. If the taxable value of real prop-
29 erty or operating property increases less than three percent (3%) in a year,
30 then the value of the real property or operating property shall be increased
31 by the amount that the assessment increased. "Sale" or "transfer" means any
32 conveyance of title to real property or operating property, or any estate or
33 interest therein, for a consideration, and any contract for such conveyance.
34 The term "sale" or the term "transfer" also includes the grant, assignment,
35 quitclaim, sale or transfer of improvements constructed upon leased land.
36 The term "sale" or the term "transfer" also includes the transfer or acquisi-
37 tion within any twelve (12) month period of a controlling interest in any
38 entity with an interest in real property or operating property located in this
39 state for a consideration. For purposes of this section all acquisitions by
40 persons acting in concert shall be aggregated for purposes of determining
41 whether a transfer or acquisition of a controlling interest has taken place.
42 The state tax commission shall promulgate rules to determine when persons are
43 acting in concert. In adopting a rule for this purpose, the state tax commis-
2
1 sion shall consider the following:
2 (a) Persons shall be treated as acting in concert when they have a rela-
3 tionship with each other such that one (1) person influences or controls
4 the actions of another through common ownership; and
5 (b) When persons are not owned or controlled through common ownership,
6 they shall be treated as acting in concert only when the unity, with which
7 the purchasers have negotiated and will consummate the transfer of owner-
8 ship interest, supports a finding that they are acting as a single entity.
9 If the acquisitions are completely independent, with each purchaser buying
10 without regard to the identity of the other purchasers, then the acquisitions
11 shall be considered separate acquisitions.
12 (2) As used in this section, a sales or transfer of property shall not be
13 deemed to have occurred if the following happens:
14 (a) A transfer of a mortgage or other interest in real property or oper-
15 ating property merely to secure a debt, or the assignment thereof;
16 (b) A transfer of title to or from the United States, any territory or
17 state or any agency, department, instrumentality or political subdivision
18 thereof;
19 (c) A transfer of title between spouses, including gifts;
20 (d) A transfer of title between former spouses in compliance with the
21 decree of divorce;
22 (e) Transfers, assignments or conveyances of unpatented mines or mining
23 claims;
24 (f) A transfer, assignment or other conveyance of real property or oper-
25 ating property to a corporation or other business organization if the per-
26 son conveying the real property or operating property owns one hundred
27 percent (100%) of the corporation or organization to which the conveyance
28 is made;
29 (g) The making, delivering or filing of conveyances of real property or
30 operating property to make effective any plan of reorganization or adjust-
31 ment:
32 (i) Confirmed under the bankruptcy act, as amended, title 11 of
33 U.S.C.;
34 (ii) Approved in an equity receivership proceeding involving a cor-
35 poration, as defined in the bankruptcy act; or
36 (iii) Whereby a mere change in identity, form or place or organiza-
37 tion is effected, such as a transfer between a corporation and its
38 parent corporation, a subsidiary or an affiliated corporation, if the
39 making, delivering or filing of instruments of transfer or conveyance
40 occurs within five (5) years after the date of the confirmation,
41 approval or change;
42 (h) A transfer of real property or operating property into a trust as
43 long as the owner or owners have control of the trust; or
44 (i) The exchange of real property or operating property held for produc-
45 tive use in a trade or business or for investment if such property is
46 exchanged solely for property of like kind which is to be held either for
47 productive use in a trade or business or for investment, and if such
48 exchange qualifies as a nontaxable exchange pursuant to 26 U.S.C. section
49 1031.
50 (3) When title to the real property or operating property changes by
51 sale or inheritance except as provided in subsection (2) of this section, then
52 the real property or operating property shall acquire a new taxable value
53 equal to the market value at the time of the transfer. When improvements in
54 excess of one thousand dollars ($1,000) are made to the property, the property
55 shall acquire a new taxable value equal to the value of the improvements added
3
1 to the prior taxable value. When property is sold or transferred or improve-
2 ments in excess of one thousand dollars ($1,000) are made to the property it
3 is the duty of the owner to notify the county assessor with either the sales
4 price of the property or the cost of the improvements. Failure to notify the
5 county assessor of such fact or facts may result in the removal of exemption
6 from the property pursuant to this section. The property included in the cal-
7 culation of the exemption set forth in this section shall include each parcel
8 of real property owned by the taxpayer. Property of a taxpayer assessed pursu-
9 ant to chapter 17, title 63, Idaho Code, shall not be eligible for the exemp-
10 tion provided by this section. Any increase provided by this section shall be
11 taken after taking any other exemption otherwise provided by law.
12 (4) The legislature declares this exemption to be necessary and just.
13 (5) The state tax commission shall adopt all rules that may be necessary
14 to implement the provisions of this section.
15 SECTION 2. An emergency existing therefor, which emergency is hereby
16 declared to exist, this act shall be in full force and effect on and after its
17 passage and approval, and retroactively to January 1, 2007.
STATEMENT OF PURPOSE
RS 16987
The purpose of this legislation is to exempt from the
property tax any increase in the net taxable value of real
property of a taxpayer in excess of three (3) percent per year.
This legislation provides that the property included in the
calculation of the exemption shall include each parcel of real
property owned by the taxpayer, provides that the exemption does
not apply to forest lands, provides that the legislature declares
the exemption necessary and just, and provides for rules.
This legislation also declares an emergency and provides for
retroactive application.
FISCAL IMPACT
Local revenue will be unaffected except for a few districts
that hit statutory levy limits. Increased circuit breaker
payments will have a small impact on the general fund.
Contact
Name: Rep. George Eskridge
Phone: 332-1270
Sen. Shawn Keough
Sen. Joyce Broadsword
Sen. Diane Bilyeu
Rep. Eric Anderson
Rep. Frank Henderson
Rep. Bob Nonini
Rep. Rich Wills
Rep. R.J. Harwood
Rep. Marge Chadderdon
Rep. Paul Shepherd
Rep. George Sayler
Rep. Pete Nielsen
Rep. Mary Lou Shepherd
Rep. Phil Hart
STATEMENT OF PURPOSE/FISCAL NOTE H 264