H.765

Introduced by Representatives Clark of Vergennes and Smith of Morristown

Referred to Committee on

Date:

Subject:  Taxation; education property tax; homestead exemption

Statement of purpose:  This bill proposes to repeal the property tax adjustment for homeowners, provide homeowners with a $50,000.00 homestead property tax exemption, and retain the renter rebate program.

AN ACT RELATING TO HOMESTEAD PROPERTY TAX EXEMPTION

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  REDESIGNATION OF CHAPTER

     Chapter 154 of Title 32 (Homestead property tax income sensitivity adjustment) is redesignated “Renter rebate program,” effective January 1, 2009.

Sec. 2.  32 V.S.A. § 6066 is amended to read:

§ 6066.  COMPUTATION OF ADJUSTMENT

(a)  An eligible claimant who owned the homestead on April 1 of the year in which the claim is filed shall be entitled to an adjustment amount determined as follows:

(1)(A)  For a claimant with household income of $90,000.00 or more:

(i)  the statewide education tax rate, multiplied by the equalized value of the housesite in the taxable year;

(ii)  minus (if less) the sum of:

(I)  the applicable percentage of household income for the taxable year; plus

(II)  the statewide education tax rate, multiplied by the equalized value of the housesite in the taxable year in excess of $200,000.00.

(B)  For a claimant with household income of less than $90,000.00 but more than $47,000.00, the statewide education tax rate, multiplied by the equalized value of the housesite in the taxable year, minus the applicable percentage of household income for the taxable year.

(C)  For a claimant whose household income does not exceed $47,000.00, the statewide education tax rate, multiplied by the equalized value of the housesite in the taxable year, minus the lesser of:

(i)  the applicable percentage of household income for the taxable year; or

(ii)  the statewide education tax rate, multiplied by the equalized value of the housesite in the taxable year reduced by $15,000.00.

(D)  A claimant whose household income does not exceed $90,000.00 shall also be entitled to an additional adjustment amount under this section of $10.00 per acre, up to a maximum of five acres, for each additional acre of homestead property in excess of the two-acre housesite. The adjustment amount under this section shall be shown separately on the notice of property tax adjustment to the claimant.

(2)  “Applicable percentage” in this section means two percent, multiplied by the district spending adjustment under subdivision 5401(13) of this title for the property tax year which begins in the claim year for the municipality in which the homestead residence is located; but in no event shall the applicable percentage be less than two percent.

(3)  a claimant whose household income does not exceed $47,000.00 shall also be entitled to an additional adjustment amount equal to the amount by which the property taxes for the municipal fiscal year which began in the taxable year upon the claimant’s housesite, reduced by the adjustment amount determined under subdivisions (1) and (2) of this subsection, exceeds a percentage of the claimant’s household income for the taxable year as follows:

If household income (rounded to                       then the taxpayer is      

the nearest dollar) is:                                         entitled to

                                                                        credit for the reduced   

                                                                        property tax in

                                                                                    excess of this percent of

                                                                                    that income:

                        $0 - 9,999.00                                                               2.0

            $10,000.00 - 24,999.00                                                           4.5

            $25,000.00 - 47,000.00                                                           5.0

In no event shall the credit exceed the amount of the reduced property tax.

(b)  An eligible claimant who rented the homestead on the last day of the taxable year, whose household income does not exceed $47,000.00, and who submits a certificate of rent constituting property taxes shall be entitled to a credit against the claimant’s tax liability under chapter 151 of this title equal to the amount by which the rent constituting property taxes upon the claimant’s housesite exceeds a percentage of the claimant’s household income for the taxable year as follows:

If household income (rounded to                       then the taxpayer is                   the nearest dollar) is:                            entitled to credit for

                                                                        rent constituting property

                                                                                    tax paid in excess of this

                                                                                    percent of that income:

                     $0.00 -  9,999.00                                                            2.0

            $10,000.00 - 24,999.00                                                           4.5

            $25,000.00 - 47,000.00                                                           5.0

In no event shall the credit exceed the amount of the rent constituting property tax.

(c)(b)  To be eligible for a property tax adjustment under this chapter the claimant:

(1)  must have been domiciled in this state during the entire taxable year; and

(2)  may not be a person claimed as a dependent by any taxpayer under the federal Internal Revenue Code during the taxable year.

(d)(c)  The owner of a mobile home which is sited on a lot not owned by the homeowner may include an amount determined under subdivision 6061(7) of this title as rent constituting property taxes paid on the lot with the amount of property taxes paid by the homeowner on the home for the purpose of computation of adjustments under subdivision (a)(3) of this section, unless the homeowner has included in the claim an amount of property tax on common land under the provisions of subsection (e) of this section.

(e)  Property taxes paid by a cooperative, not including a mobile home park cooperative, allocable to property used as a homestead, shall be attributable to the co-op member for the purpose of computation of adjustment of property tax liability of the co-op member under this section.  Property owned by a cooperative declared as a homestead may only include the homestead and a pro rata share of any common land owned or leased by the cooperative, not to exceed the two-acre housesite limitation.  The share of the cooperative’s assessed value attributable to the housesite shall be determined by the cooperative and specified annually in a notice to the co-op member.  Property taxes paid by a mobile home park cooperative, allocable to property used as a housesite, shall be attributed to the owner of the housesite for the purpose of computation of adjustment of property tax liability of the housesite owner under this section.  Property owned by the mobile home park cooperative and declared as a housesite may only include common property of the cooperative contiguous with at least one mobile home lot in the park, not to exceed the two-acre housesite limitation.  The share attributable to any mobile home lot shall be determined by the cooperative and specified in the cooperative agreement.

(f)  If a claimant takes title to the homestead during the calendar year preceding the claim, the parties’ proration of taxes shall be based upon the unadjusted property tax to the time of sale, unless the parties otherwise agree.

(g)  Notwithstanding subsection (d) of this section, if the land surrounding a homestead is owned by a nonprofit corporation or community land trust with tax exempt status under Section 501(c)(3) of the Internal Revenue Code, the homeowner may include an allocated amount as property tax paid on the land with the amount of property taxes paid by the homeowner on the home for the purposes of computation of adjustment under this section.  The allocated amount shall be determined by the nonprofit corporation or community land trust on a proportional basis.  The nonprofit corporation or community land trust shall provide to that homeowner, by January 31, a certificate specifying the allocated amount.  The certificate shall indicate the proportion of total property tax on that parcel which was assessed for municipal property tax, for local share property tax and for statewide property tax.

(h)  State property tax reduction incentive. A homestead owner shall be entitled to an additional property tax adjustment amount equal to one percent of the amount of income tax refund which the claimant elects to allocate to payment of homestead property tax under section 6068 of this title.

Sec. 3.  REPEAL AND STATUTORY REVISION

     32 V.S.A. § 6066a (payment of property tax adjustments) is repealed, effective January 1, 2009.  The office of legislative council shall revise the statutes in chapter 154 of Title 32 to eliminate all homestead-owner income sensitivity provisions.

Sec. 4.  32 V.S.A. § 3802(17) is added to read:

(17)  The first $50,000.00 of listed value of a homestead as defined under subdivision 5401(7) of this title and declared on or before September 1 in accordance with section 5410 of this title, multiplied by the municipality’s most recent common level of appraisal.  This exemption shall not affect the grand list value; and shall reduce municipal and education property tax liabilities, but not below $0.00.

Sec. 5.  32 V.S.A. § 5402(a) and (b) are amended to read:

(a)  A statewide education tax is imposed on all nonresidential and homestead property at the following rates:

(1)  the tax rate for nonresidential property shall be $1.59 per $100.00; and

(2)  the tax rate for homestead property shall be $1.10 multiplied by the district spending adjustment for the municipality, per $100.00, of equalized education property value as most recently determined under section 5405 of this title, minus any homestead exemption amount under subdivision 3802(17) of this title.  The homestead property tax rate for each municipality which is a member of a union or unified union school district shall be calculated as required under subsection (e) of this section. 

(b)  Calculation of education tax.

(1)  The commissioner of taxes shall determine for each municipality the education tax rates under subsection (a) of this section, divided by the municipality’s most recent common level of appraisal.  The legislative body in each municipality shall then bill each property taxpayer at the homestead or nonresidential rate determined by the commissioner under this subdivision, multiplied by the education property tax grand list value of the property, properly classified as homestead or nonresidential property and without regard to any other tax classification of the property, minus any homestead exemption amount under subdivision 3802(17) of this title.  Each homestead property tax bill shall include notice of the education spending per equalized pupil in the taxpayer’s district and its relation to the base education payment; and the effect of the education spending in the district upon the homestead tax rate and the applicable percentage for income sensitivity; and shall also include an insert supplied by the commissioner of taxes which explains the relationship of district education spending and the common level of appraisal to property tax rates.  Tax bills shall show the tax due and the calculation of the rate determined under subsection (a) of this section, divided by the municipality’s most recent common level of appraisal, multiplied by the current grand list value of the property to be taxed.  Each homestead property tax bill shall include a copy of the two page document attached to the May 11, 2007 memorandum from the speaker of the house to the commissioner of taxes, which shall be updated annually for each town by the commissioner of taxes.

(2)  Taxes assessed under this section shall be assessed and collected in the same manner as taxes assessed under chapter 133 of this title with no tax classification other than as homestead or nonresidential property.

(3)  If a district has not voted a budget by June 30, an interim homestead education tax shall be imposed at the base rate determined under subdivision (a)(2) of this section, divided by the municipality’s most recent common level of appraisal, but without regard to any district spending adjustment, and taking into account any homestead exemption amount under subdivision 3802(17) of this title.  Within 30 days after a budget is adopted and the deadline for reconsideration has passed, the commissioner shall determine the municipality’s homestead tax rate as required under subdivision (b)(1) of this subsection.

Sec. 6.  EFFECTIVE DATES

This act shall take effect upon passage, except that Sec. 2 shall apply to claims filed in 2009 and after, and Secs. 4 and 5 shall apply to property tax bills for fiscal years 2010 and after.