Leasehold Excise Tax. State leasehold excise taxes are levied and collected on the act or privilege of occupying or using publicly owned real or personal property through a leasehold interest. A leasehold interest is an interest in publicly owned real or personal property that exists by virtue of any lease, permit, license, or other written or verbal agreement between a public owner and a person who would not be exempt from property taxes if that person owned the property. The leasehold excise tax is levied at a rate of 12.84 percent of taxable rent. There are several leasehold excise tax exemptions, including certain military housing and facilities owned or used by a school, college or university which provide housing for students.
Public Lands. The Department of Natural Resources manages more than 5 million acres of land, including but not limited to state lands, state forestlands, lands included in a state forestland pool, and aquatic lands.
Tax Preference Performance Statement. State law provides a range of tax preferences that confer reduced tax liability upon a designated class of taxpayer. Tax preferences include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. Legislation that establishes or expands a tax preference must include a tax preference performance statement (TPPS) that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference. All new tax preferences automatically expire after ten years unless an alternative expiration date is provided or the tax preference is exempted from expiration.
All leasehold interests for placement of affordable housing on public lands are exempt from leasehold excise tax for:
The following definitions apply:
A TPPS is included stating the public policy objective is to incentivize the placement of affordable housing on public lands and the Legislature intends to continue the preference if a JLARC review finds that the number of affordable housing units placed on public lands increased following the enactment of this tax preference. The bill is not subject to automatic expiration for tax preferences.