Brief Description: Modifying tax abatement provisions.

Sponsors: By House Committee on Finance (originally sponsored by Representatives Takko and DeBolt).

House Committee on Finance
Senate Committee on Ways & Means

Background:

Property in the state is subject to the property tax each year based on the property's value, unless specifically exempted by law. Property value is determined as of January 1 of the assessment year. Property taxes are paid in the following year based on this value. Generally, changes in value that occur between the January 1 assessment date and the time the tax bill is calculated are not made.

Property that is destroyed in whole or part, or reduced in value as a result of a natural disaster after the assessment date, may be eligible for an adjustment in assessed value. The property damaged in a natural disaster must be reduced in value by 20 percent or more and be located in a Governor-designated disaster area. Under these circumstances the assessed value adjustment is equal to the value reduction due to the destruction or damage. The assessed value adjustment reduces the property tax in the following year. The property tax due in the year in which the destruction or damage occurs is not reduced.

For tax years 1998 through 2004, destroyed property or property damaged in certain disaster areas also received tax reductions during the year in which the destruction or damage occurred. The amount of the tax reduction was proportional to the time remaining in the year after the destruction or damage occurred.

Summary:

Property that is destroyed and property reduced in value by 20 percent by a natural disaster after the assessment date may receive tax reductions during the year in which the destruction or damage occurred. The amount of the tax reduction is proportional to the time remaining in the year after the destruction or damage occurs. The natural disaster area may be declared by the county legislative authority. The tax relief is not available for property that is destroyed or damaged voluntarily.

Votes on Final Passage:

House   95   0
Senate   48   0

Effective: July 24, 2005