HB106: implementing an education property tax homestead exemption.

HB 106-FN-LOCAL - AS INTRODUCED

2003 SESSION

03-0043

04/10

HOUSE BILL HB 106-FN-LOCAL

AN ACT implementing an education property tax homestead exemption.

SPONSORS: Rep. Hess, Merr 37; Rep. Boyce, Belk 31

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes a homestead exemption from the education property tax assessment equivalent to 20 percent of the first $200,000 of equalized assessed value.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-0043

04/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

AN ACT implementing an education property tax homestead exemption.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Findings. The general court finds that:

I. It is to the benefit of this state to implement a circuit breaker on the total property tax burden on homesteads so that citizens of modest means do not pay an unreasonable and excessive portion of their income in total property taxes.

II. The general good, benefit, and welfare of the state is advanced by promoting home ownership and that an exemption of 20 percent of the first $200,000 of equalized value of primary residences (homesteads) from the statewide education property tax is reasonable.

III. It is reasonable to exempt 20 percent of the first $200,000 of equalized value of homestead property from the statewide education property tax as that amount retains a reasonable price or value limit within which residents can obtain and maintain a reasonable amount of shelter and comfort from a home, and that homestead value, which includes the land on which the home is situated, in excess of 80 percent of the first $200,000 for each primary residence may reasonably be considered to be in excess of basic shelter and comfort requirements for a home and as such should be subjected to the statewide education property tax that applies to all other property beyond basic homestead requirements.

2 New Chapter; Homestead Exemption. Amend RSA by inserting after chapter 76 the following new chapter:

CHAPTER 76-A

EDUCATION PROPERTY TAX HOMESTEAD EXEMPTION

76-A:1 Definition. In this chapter, "homestead" or "homestead property" means the dwelling owned by a claimant or in the case of a multi-unit dwelling, the portion of the dwelling, which is used as the claimant's principal place of residence and the claimant's domicile for purposes of RSA 654:1. "Homestead" shall not include land and buildings taxed under RSA 79-A, 79-B, or 79-C or land and buildings or the portion of land and buildings rented or used for commercial or industrial purposes. In this paragraph the term "owned by a claimant" includes a vendee in possession under a land contract, one or more joint tenants or tenants in common, and a trustee of a grantor trust pursuant to sections 671-679 of the United States Internal Revenue Code.

76-A:2 Homestead Exemption.

I. Twenty percent of the first $200,000 of equalized assessed value of homesteads of qualifying taxpayers shall be exempt from the education property tax due under RSA 76:3.

II. A qualifying taxpayer is an individual who:

(a) Is subject to the education property tax as a resident individual under RSA 76:3, or has been granted a local property tax exemption under RSA 72:39-a.

(b) On April 1 owns a homestead or interest in a homestead subject to the state education property tax; and

(c) Files a claim certifying under the pains and penalties of perjury that such taxpayer qualifies under subparagraphs (a) and (b) with the selectmen or local assessing official on or before July 31 of the tax year for which the claim is made. Claims filed after July 31 each year shall not be considered timely for the current year, but shall be considered filed for the following tax year. The selectmen or local assessing official may waive the filing of a claim and list the homestead exemption for a taxpayer who has been granted a local property tax exemption under RSA 72:39-a and who is reasonably believed to currently qualify for that exemption.

III. Upon receipt of a claim for a homestead exemption under this section, the selectmen or assessing officials shall review the claim and shall grant or deny the claim in writing by September 1 following receipt of the claim. Failure of the selectmen or assessing officials to respond shall constitute acceptance of the claim. Accepted claims shall continue from year to year without necessity for refiling unless there is a change in ownership or use of the property, and except as provided for in subparagraph V(d). Accepted claims may at any time be revoked for any tax year or portion thereof following the occurrence of one or more of the following events:

(a) The claimant fails to file a return as required under this section within one year following the close of the tax year for which the exemption is claimed; or

(b) The claimant is no longer qualified for the local property tax exemption under RSA 72:39-a; or

(c) The claimant is no longer qualified under the definition of homestead in RSA 76-A:1 due to a change in ownership or use.

IV. Claims shall be made on forms prescribed by the commissioner and provided to each municipality.

V. The following shall apply to the determination of the amount of property value exempted relative to a homestead which is part of a single tax parcel upon which is located other dwelling units not owned or occupied by the taxpayer or significant non-residential use of the property:

(a) If the tax parcel includes property used for business or other nonresidential use, the exempt homestead amount shall include, in addition to the actual homestead, the lesser of 1,000 square feet of floor area of such non-residential use property or $25,000 of equalized value, except that family owned and operated farms which are not owned by a business entity or held in the name of a non-natural person shall be eligible for the full homestead exemption on all property not assessed under RSA 79-A, 79-B, or 79-C.

(b) If the tax parcel includes other dwellings or dwelling units, the value of the homestead exemption relative to the claimed homestead shall be determined by the assessing official as follows:

(1) Divide the value of the tax parcel by the number of dwelling units; or

(2) If the square footage of each dwelling unit is known, multiply the value of the tax parcel by a fraction consisting of the square footage of the claimed homestead divided by the total square footage of all dwelling units in the parcel; or

(c) In lieu of the methods of determining the amount of homestead exemption in subparagraph (a) or (b), a taxpayer may present competent evidence of a greater proportion of exempt value to the assessing officials. In such instance the taxpayer bears the burden of proving the claimed exemption by the preponderance of the evidence.

(d) The procedure, or exclusion of value resulting from the procedure in subparagraph (b) shall be waived to the extent it pertains to a single additional dwelling unit on the homestead property that is occupied by a direct lineal ascendant or descendant, sibling, aunt, uncle, niece or nephew, by blood, marriage, or law, of the qualifying taxpayer who does not pay rent, other than for utilities, as annually certified by the claimant.

(e) In no case shall the total homestead exemption be applied to a total equalized assessed value in excess of $200,000.

VI. If a taxpayer purchases a homestead after April 1 for which no homestead exemption was claimed by the previous owner, the taxpayer may apply to the department for a refund of state education property tax previously paid on the homestead, but for which no application was made. The amount of such refund shall be apportioned according to the number of days in the tax year the taxpayer owned and occupied the homestead. Claims by taxpayers purchasing homestead property shall be filed with the inventory of property transfer required to be filed with the municipality pursuant to RSA 74:18. The selectmen or assessing officials shall, within 30 days of filing of the referral claim, accept or deny it and, if accepted, notify the department. The department shall certify the amount of such refund to the state treasurer for payment from the education trust fund created by RSA 198:39.

3 Effective Date. This act shall take effect July 1, 2003.

LBAO

03-0043

12/17/02

HB 106-FN-LOCAL - FISCAL NOTE

AN ACT implementing an education property tax homestead exemption.

FISCAL IMPACT:

The Department of Revenue Administration indicates this bill will decrease state education trust fund revenue by $48.95 million in FY 2004, $51.45 million in FY 2005 and $54 million in FY 2006. The Department indicates this bill will increase state general fund and local expenditures by an indeterminable amount in FY 2004 and each year thereafter. There will be no fiscal impact on county and local revenue or county expenditures.

METHODOLOGY:

The Department used a property tax model for FY 2003 data and assumed a 5% average growth in property values to estimate the amount by which statewide property tax revenues will decrease through FY 2006. The Department indicates the cost to administer this bill will increase state and local expenditures by an indeterminable amount.