Citations Affected: IC 6-1.1.
Synopsis: Assessment of rental and cooperative property. Provides a
property tax deduction for rental and cooperative housing. Establishes
the method for determining the assessed value of rental and cooperative
housing. Requires that evidence relevant to the value-in-use of rental
and cooperative housing be considered in establishing the true tax
value of the property.
Effective: Upon passage.
January 14, 2002, read first time and referred to Committee on Finance.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
SECTION 1.
IC 6-1.1-1-8.7
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 8.7. "Low income housing" means real
property that on an assessment date is used to obtain any of the
following benefits:
(1) Low income housing credits under Section 42 of the
Internal Revenue Code.
(2) Low interest loans for benefits from the United States
Department of Agriculture Rural Housing Section 515
Program.
(3) Below market, federally insured, or governmental
financing for housing, including tax exempt bonds under
Section 142 of the Internal Revenue Code for qualified
residential rental projects.
(4) A low interest loan under Section 235 or 236 of the
National Housing Act (12 U.S.C. 1715z or 12 U.S.C. 1715z-1)
or 42 U.S.C. 1485.
(5) A government rent subsidy for housing.
(6) A government guaranteed loan for a housing project.
SECTION 2.
IC 6-1.1-1-13.5
IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE UPON PASSAGE]: Sec. 13.5. (a) "Principal rental
dwelling" refers to residential improvements to land that an
individual with a leasehold interest in the property uses as the
individual's principal place of residence, regardless of whether the
individual is absent from the property while in a facility described
in subsection (b).
(b) The term does not include any of the following:
(1) A hospital licensed under IC 16-21.
(2) A health facility licensed under IC 16-28.
(3) A residential facility licensed under IC 16-28.
(4) A Christian Science home or sanatorium.
(5) A group home licensed under IC 12-17.4 or
IC 12-28-4.
(6) An establishment that serves as an emergency shelter for
victims of domestic violence, homeless persons, or other
similar purpose.
(7) A fraternity, sorority, or student cooperative housing
organization described in
IC 6-2.1-3-19.
SECTION 3.
IC 6-1.1-6.9
IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]:
Chapter 6.9. Rental and Cooperative Housing
Sec. 1. Except as provided in sections 2 and 3 of this chapter, an
assessing official, for an original appraisal or an appeal of an
appraisal, shall consider all relevant information in determining
the true tax value of rental and cooperative housing to the extent
that the information is allowed under the rules adopted by the state
board of tax commissioners before January 1, 2002, or the
department of local government finance after December 31, 2001.
Relevant information consists of the following:
(1) Rental levels and income.
(2) Actual construction costs.
(3) Comparable properties.
(4) Appraisals of the use value of the property.
(5) Contract or deed restrictions requiring low income
housing to be rented at less than its fair market rental value.
(6) Any other information compiled in accordance with
generally accepted appraisal principles.
Sec. 2. The true tax value of low income rental housing shall be
determined using the capitalization of income method of valuation.
Sec. 3. The value of any tax incentive credits or other
government subsidies, including below market financing, granted
for the construction, conversion, or use of property as low income
housing may not be considered in determining the true tax value of
the property regardless of whether the credits or other subsidies
are made available, directly or indirectly, to compensate the owner
for the rental of low income housing at a rate that is less than the
fair market rental rate for the property.
SECTION 4.
IC 6-1.1-12-41
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 41. (a) This section applies to a multifamily
dwelling with at least three (3) residential units that is owned by a
cooperative, a common interest community, or an owner's
association if at least eighty percent (80%) of the residential units
that comprise the cooperative, common interest, or owner's
association community are occupied by individuals who have:
(1) an ownership interest in the cooperative, common interest
community, or owner's association; or
(2) an undivided ownership interest in the multifamily
dwelling.
(b) An assessed value deduction for a multifamily dwelling
described in subsection (a) is equal to twenty-five percent (25%) of
the shelter allowance allowed for owner occupied residential
property in the county where the real property is located under the
rules adopted by the state board of tax commissioners before
January 1, 2002, or the department of local government finance
after December 31, 2001, multiplied by the number of units in the
multifamily dwelling that are used as a principal dwelling by an
individual who has:
(1) an ownership interest in the cooperative, common interest
community, or owner's association; or
(2) an undivided ownership interest in the multifamily
dwelling.
(c) A certificate of occupancy that complies with this subsection
is prima facie evidence that a unit in the real property is available
for use as a principal rental dwelling. To comply with this
subsection, the certificate of occupancy must:
(1) be prepared on a form prescribed by the department of
local government finance;
(2) be signed under penalties of perjury by the principal
officer of the cooperative, common interest community, or
owner's association; and
(3) indicate that an individual who has:
(A) an ownership interest in the cooperative, common
interest community, or owner's association; or
(B) an undivided ownership interest in the multifamily
dwelling;
used the unit as a principal rental dwelling on an assessment
date or within two (2) years before the assessment date.
(d) To obtain the deduction under this section, the principal
officer for the cooperative, common interest community, or
owner's association must file a certified application in duplicate, on
forms prescribed by the department of local government finance,
with the auditor of the county in which the property is subject to
assessment. The certified application must be filed before May 11
in the year containing the assessment date to which the application
applies.
SECTION 5.
IC 6-1.1-12-42
IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 42. (a) A taxpayer that is regularly engaged
in the business of leasing real property to persons who use the real
property as a principal rental dwelling is entitled to a deduction
against the assessed value of the real property.
(b) This subsection applies to real property that consists of a
single family dwelling that is used or regularly available to be used
as a principal rental dwelling. The deduction against assessed value
under this section for the real property is equal to one hundred
percent (100%) of the shelter allowance applicable to owner owned
residential property in the county where the real property is
located, under the rules adopted by the state board of tax
commissioners before January 1, 2002, or the department of local
government finance after December 31, 2002.
(c) This subsection applies to real property that consists of a two
(2) family dwelling in which at least one (1) unit is used or
regularly available to be used as a principal rental dwelling. The
deduction against assessed value under this section for the real
property is equal to fifty percent (50%) of the shelter allowance
applicable to owner owned residential property in the county
where the real property is located, under the rules adopted by the
state board of tax commissioners before January 1, 2002, or the
department of local government finance after December 31, 2002,
multiplied by the number of units in the real property that are used
or regularly available for use as principal rental dwellings.
(d) This subsection applies to a multifamily dwelling consisting
of at least three (3) units in which at least one (1) unit is used or
regularly available to be used as a principal rental dwelling. The
deduction against assessed value under this section for the real
property is equal to fifty percent (50%) of the shelter allowance
applicable to owner owned residential property in the county
where the real property is located, under the rules adopted by the
state board of tax commissioners before January 1, 2002, or the
department of local government finance after December 31, 2002,
multiplied by the number of units in the real property that are used
or regularly available for use as principal rental dwellings.
(e) A certificate of occupancy that complies with this subsection
is prima facie evidence that a unit in the real property is available
for use as a principal rental dwelling. To comply with this
subsection, the certificate of occupancy must:
(1) be prepared on a form prescribed by the department of
local government finance;
(2) be signed under penalties of perjury by the owner; and
(3) indicate that a tenant used the unit as a principal rental
dwelling on an assessment date or within two (2) years before
the assessment date.
(f) To obtain the deduction under this section, the owner must
file a certified application in duplicate, on forms prescribed by the
department of local government finance, with the auditor of the
county in which the property is subject to assessment. The certified
application must be filed before May 11 in the year containing the
assessment date to which the application applies.
SECTION 6. [EFFECTIVE UPON PASSAGE] (a)
IC 6-1.1-6.9
, as
added by this act, applies to assessment dates after December 31,
2002.
(b) The department of local government finance shall prescribe
the forms required under
IC 6-1.1-12-41
and
IC 6-1.1-12-42
, as
added by this act, before August 31, 2002.
(c)
IC 6-1.1-12-41
and
IC 6-1.1-12-42
, both as added by this act,
apply to property taxes first due and payable after December 31,
2002. Notwithstanding
IC 6-1.1-12-41
and
IC 6-1.1-12-42
, both as
added by this act, a person that files a certified statement applying
the deduction under
IC 6-1.1-12-41
or
IC 6-1.1-12-42
, both as
added by this act, before October 1, 2002, is eligible for the
deduction to the same extent as if the person had filed the certified
statement before May 11, 2002.
SECTION 7. An emergency is declared for this act.