Property Tax Classification And Assessment Rates

Concerning property taxation, and, in connection therewith, establishing subclasses of residential and nonresidential property; for the 2022 and 2023 property tax years, temporarily reducing the assessment rate for property classified as agricultural property or renewable energy production property from twenty-nine percent to twenty-six and four-tenths percent, for property classified as multi-family residential real property from seven and fifteen one-hundredths percent to six and eight-tenths percent, contingent on the assessment rate not otherwise being reduced by an initiated measure, and for all other residential real property from seven and fifteen one-hundredths percent to six and ninety-five one-hundredths percent; restructuring the assessment rate laws; expanding the property tax deferral program to allow taxpayers to defer increases in property taxes in limited circumstances; and making an appropriation.

The act repeals a moratorium on changing a ratio for valuation for assessment (assessment rate), which is the percentage applied to a property's actual value to determine the taxable amount upon which a mill levy is imposed and classifies agricultural property, lodging property, and renewable energy production property as new subclasses of nonresidential property for purposes of the valuation for assessment. The assessment rate for agricultural property and renewable energy production property is temporarily reduced from 29% to 26.4% for the next 2 property tax years. The law is restructured so that, if an initiated measure to reduce the assessment rate for nonresidential property is approved by voters, then it would only apply to lodging property.

Multi-family residential real property is classified as a new subclass of residential real property. The law is restructured so that, if an initiated measure to reduce the residential assessment rate is approved by voters, then it would only apply to multi-family residential real property. If the initiated measure fails or is not on the ballot, then, the assessment rate for multi-family residential real property is temporarily reduced from 7.15% to 6.8% for the next 2 property tax years. The assessment rate for all residential real property other than multi-family residential real property is temporarily reduced from 7.15% to 6.95% for the next 2 property tax years.

The property tax deferral program is expanded to allow any person to defer the payment of the portion of real property taxes that exceed the tax-growth cap, which is an amount equal to the average of the person's real property taxes paid for the preceding 2 property tax years for the same homestead, increased by 4%. The minimum amount a taxpayer may defer at one time under this authorization is $100, and the total taxes that a taxpayer may defer is $10,000. The taxpayer is treated like a person called into military service for purposes of surviving-spouse eligibility and the equity the person must have in the homestead to qualify for a deferral.

The governor's office, in consultation with the treasurer, is required to commission a study on the property tax deferral program and make recommendations for possible changes to the general assembly by January 1, 2022.

Assessors are required to include information about the assessment rates that apply to the various classes of property, which is prepared by the property tax administrator, along with the notices of valuation that are sent in 2022 or make this information available on the assessor's website.

Finally, the act makes conforming amendments related to the new classifications or assessment rates.

(Note: This summary applies to this bill as enacted.)