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PAG LIN 1 1 DIVISION I 1 2 INCOME TAX CREDIT &endash; HOMESTEAD 1 3 Section 1. NEW SECTION. 422.11 HOMESTEAD CREDIT. 1 4 1. The taxes imposed under this division, less the credits 1 5 allowed under sections 422.11A, 422.11B, 422.11C, 422.12, and 1 6 422.12B, shall be reduced by a homestead credit equal to the 1 7 amount of property taxes paid by the taxpayer which were 1 8 levied on the first four thousand eight hundred fifty dollars 1 9 of the taxpayer's homestead, as defined in this section. Not 1 10 more than one credit under this section may be claimed for the 1 11 same dwelling. In determining if the property tax has been 1 12 paid, any installment payment of property taxes shall be 1 13 considered as being paid towards the taxes on the first four 1 14 thousand eight hundred fifty dollars. However, if the 1 15 taxpayer received a property tax credit pursuant to sections 1 16 425.16 through 425.40 for property taxes payable in the fiscal 1 17 year beginning in the tax year on the same dwelling, the 1 18 amount of the credit under this section shall be reduced, but 1 19 not below zero, by the amount so received. 1 20 2. Any credit in excess of the tax liability shall be 1 21 refunded. In lieu of claiming a refund, a taxpayer may elect 1 22 to have the overpayment shown on the taxpayer's final, 1 23 completed return credited to the tax liability for the 1 24 following taxable year. 1 25 3. The word "homestead" shall have the following meaning: 1 26 a. The homestead includes the dwelling house which the 1 27 owner, in good faith, occupied as a home on July 1 of the tax 1 28 year for which the credit is claimed and occupied as a home 1 29 for at least six months during the tax year, except as 1 30 otherwise provided. 1 31 When any person is inducted into active service under the 1 32 Selective Training and Service Act of the United States or 1 33 whose voluntary entry into active service results in a credit 1 34 on the quota of persons required for service under the 1 35 Selective Training and Service Act, or who, being a member of 2 1 any component part of the military, naval, or air forces or 2 2 nurse corps of this state or nation, is called or ordered into 2 3 active service, the person shall be considered as occupying or 2 4 living on the homestead during such service and, where 2 5 equitable or legal title of the homestead is in the spouse of 2 6 the person who is a member of or is inducted into the armed 2 7 services of the United States, the spouse shall be considered 2 8 as occupying or living on the homestead during such service. 2 9 When a person is confined in a nursing home, extended-care 2 10 facility, or hospital, that person shall be considered as 2 11 occupying or living on a homestead where that person is the 2 12 owner of the homestead and that person maintains the homestead 2 13 and does not lease, rent, or otherwise receive profits from 2 14 other persons for the use of it. 2 15 b. The homestead may contain one or more contiguous lots 2 16 or tracts of land with the buildings or other appurtenances 2 17 thereon habitually, and in good faith, used as a part of the 2 18 homestead. 2 19 c. The homestead must not embrace more than one dwelling 2 20 house, but where a homestead has more than one dwelling house 2 21 situated on it, the credit provided for in this section shall 2 22 apply to the home and buildings used by the owner, but shall 2 23 not apply to any other dwelling house and buildings 2 24 appurtenant. 2 25 d. The words "dwelling house" shall embrace any building 2 26 occupied wholly or in part by the taxpayer as a home. 2 27 4. The word "owner" shall mean the person who holds the 2 28 fee simple title to the homestead, and in addition shall mean 2 29 the person occupying as a surviving spouse or the person 2 30 occupying under a contract of purchase which contract has been 2 31 recorded in the office of the county recorder of the county in 2 32 which the property is located, or the person occupying the 2 33 homestead under devise or by operation of the inheritance laws 2 34 where the whole interest passes or where the divided interest 2 35 is shared only by persons related or formerly related to each 3 1 other by blood, marriage or adoption, or the person occupying 3 2 the homestead is a shareholder of a family farm corporation 3 3 that owns the property, or the person occupying the homestead 3 4 under a deed which conveys a divided interest where the 3 5 divided interest is shared only by persons related or formerly 3 6 related to each other by blood, marriage or adoption or where 3 7 the person occupying the homestead holds a life estate with 3 8 the reversion interest held by a nonprofit corporation 3 9 organized under chapter 504A, provided that the holder of the 3 10 life estate is liable for and pays property tax on the 3 11 homestead or where the person occupying the homestead holds an 3 12 interest in a horizontal property regime under chapter 499B, 3 13 regardless of whether the underlying land committed to the 3 14 horizontal property regime is in fee or as a leasehold 3 15 interest, provided that the holder of the interest in the 3 16 horizontal property regime is liable for and pays property tax 3 17 on the homestead. For the purpose of this section the word 3 18 "owner" shall be construed to mean a bona fide owner and not 3 19 one for the purpose only of availing the person of the 3 20 benefits of this section. 3 21 Sec. 2. REPEALS. Sections 425.1 through 425.15, Code 3 22 1995, are repealed. 3 23 DIVISION II 3 24 COORDINATING AMENDMENTS 3 25 Sec. 3. Section 8.59, Code 1995, is amended to read as 3 26 follows: 3 27 8.59 APPROPRIATIONS FREEZE. 3 28 Notwithstanding contrary provisions of the Code, the 3 29 amounts appropriated under the applicable sections of the Code 3 30 for fiscal years commencing on or after July 1, 1993, are 3 31 limited to those amounts expended under those sections for the 3 32 fiscal year commencing July 1, 1992. If an applicable section 3 33 appropriates moneys to be distributed to different recipients 3 34 and the operation of this section reduces the total amount to 3 35 be distributed under the applicable section, the moneys shall 4 1 be prorated among the recipients. As used in this section, 4 2 "applicable sections" means the following sections: 53.50, 4 3 229.35, 230.8, 230.11, 405A.8, 411.20,425.1,425.39, 426A.1, 4 4 663.44, and 822.5. 4 5 Sec. 4. Section 100.18, subsection 2, paragraph b, Code 4 6 1995, is amended to read as follows: 4 7 b. The rules shall require the installation of smoke 4 8 detectors in existing single-family rental units and multiple- 4 9 unit residential buildings. Existing single-family dwelling 4 10 units shall be equipped with approved smoke detectors. A 4 11 person who files for a homestead property tax credit pursuant 4 12 to chapter 425 or claims the homestead income tax credit in 4 13 section 422.11 shall certify that the single-family dwelling 4 14 unit for which the credit is filed or claimed, as appropriate, 4 15 has a smoke detector installed in compliance with this 4 16 section, or that one will be installed within thirty days of 4 17 the date the filing or the claim for the credit is made. The 4 18 state fire marshal shall adopt rules and establish appropriate 4 19 procedures to administer this subsection. 4 20 Sec. 5. Section 216.12, subsection 5, Code 1995, is 4 21 amended to read as follows: 4 22 5. The rental or leasing of a housing accommodation in a 4 23 building which contains housing accommodations for not more 4 24 than four families living independently of each other, if the 4 25 owner resides in one of the housing accommodations for which 4 26 the owner qualifies for the homestead income tax credit under 4 27 section425.1422.11. 4 28 Sec. 6. Section 331.401, subsection 1, paragraphs e and f, 4 29 Code 1995, are amended to read as follows: 4 30 e. Adopt resolutions authorizing the county assessor to 4 31 provide forms forhomestead exemption claimants as provided in4 32section 425.2 andmilitary service tax exemptions as provided 4 33 in section 427.6. 4 34 f. Examine and allow or disallow claims forhomestead4 35exemption in accordance with section 425.3 and claims for5 1 military service tax exemption in accordance with chapter 426A 5 2 and sections 427.3 to 427.6. The board, by a single 5 3 resolution, may allow or disallow the exemptions recommended 5 4 by the assessor. 5 5 Sec. 7. Section 331.512, subsection 3, Code 1995, is 5 6 amended to read as follows: 5 7 3. Carry out duties relating to thehomestead tax credit5 8andagricultural land tax credit as provided inchapters 4255 9andchapter 426. 5 10 Sec. 8. Section 331.559, subsection 12, Code 1995, is 5 11 amended to read as follows: 5 12 12. Carry out duties relating to the administration of the 5 13 homestead property tax credit as provided insections 425.4,5 14425.5, 425.7, 425.9, 425.10 andsection 425.25. 5 15 Sec. 9. Section 404.3, subsection 1, Code 1995, is amended 5 16 to read as follows: 5 17 1. All qualified real estate assessed as residential 5 18 property is eligible to receive an exemption from taxation 5 19 based on the actual value added by the improvements. The 5 20 exemption is for a period of ten years. The amount of the 5 21 exemption is equal to a percent of the actual value added by 5 22 the improvements, determined as follows:Oneone hundred 5 23 fifteen percent of the value added by the improvements. 5 24 However, the amount of the actual value added by the 5 25 improvements which shall be used to compute the exemption 5 26 shall not exceed twenty thousand dollars and the granting of 5 27 the exemption shall not result in the actual value of the 5 28 qualified real estate being reduced below the actual value on 5 29 which the homestead income tax credit is computed under 5 30 section425.1422.11. 5 31 Sec. 10. Section 425.16, Code 1995, is amended to read as 5 32 follows: 5 33 425.16 ADDITIONAL TAX CREDIT. 5 34In addition to the homestead tax credit allowed under5 35section 425.1, subsections 1 to 4, personsPersons who own or 6 1 rent their homesteads and who meet the qualifications provided 6 2 in this division are eligible for an extraordinary homestead 6 3 property tax credit or reimbursement. 6 4 Sec. 11. Section 425.17, subsection 8, Code 1995, is 6 5 amended to read as follows: 6 6 8. "Property taxes due" means property taxes including any 6 7 special assessments, but exclusive of delinquent interest and 6 8 charges for services, due on a claimant's homestead in this 6 9 state, but includes only property taxes for which the claimant 6 10 is liable and which will actually be paid by the claimant. 6 11 However, if the claimant is a person whose property taxes have 6 12 been suspended under sections 427.8 and 427.9, "property taxes 6 13 due" means property taxes including any special assessments, 6 14 but exclusive of delinquent interest and charges for services, 6 15 due on a claimant's homestead in this state, but includes only 6 16 property taxes for which the claimant is liable and which 6 17 would have to be paid by the claimant if the payment of the 6 18 taxes has not been suspended pursuant to sections 427.8 and 6 19 427.9. "Property taxes due" shall be computed with no 6 20 deduction for any credit under this division or for any 6 21 homestead income tax credit allowed under section425.16 22 422.11. Each claim shall be based upon the taxes due during 6 23 the fiscal year next following the base year. If a homestead 6 24 is owned by two or more persons as joint tenants or tenants in 6 25 common, and one or more persons are not members of claimant's 6 26 household, "property taxes due" is that part of property taxes 6 27 due on the homestead which equals the ownership percentage of 6 28 the claimant and the claimant's household. The county 6 29 treasurer shall include with the tax receipt a statement that 6 30 if the owner of the property is eighteen years of age or over, 6 31 the person may be eligible for the credit allowed under this 6 32 division. If a homestead is an integral part of a farm, the 6 33 claimant may use the total property taxes due for the larger 6 34 unit. If a homestead is an integral part of a multidwelling 6 35 or multipurpose building the property taxes due for the 7 1 purpose of this subsection shall be prorated to reflect the 7 2 portion which the value of the property that the household 7 3 occupies as its homestead is to the value of the entire 7 4 structure. For purposes of this subsection, "unit" refers to 7 5 that parcel of property covered by a single tax statement of 7 6 which the homestead is a part. 7 7 Sec. 12. Section 425.23, subsection 1, Code 1995, is 7 8 amended to read as follows: 7 9 1. a. Thetentativecredit or reimbursement for a 7 10 claimant described in section 425.17, subsection 2, paragraph 7 11 "a" and paragraph "b" if no appropriation is made to the fund 7 12 created in section 425.40 shall be determined in accordance 7 13 with the following schedule: 7 14 Percent of property taxes 7 15 due or rent constituting 7 16 property taxes paid 7 17 If the household allowed as a credit or 7 18 income is: reimbursement: 7 19 $ 0 &endash; 5,999.99.................100% 7 20 6,000 &endash; 6,999.99.................. 85 7 21 7,000 &endash; 7,999.99.................. 70 7 22 8,000 &endash; 9,999.99.................. 50 7 23 10,000 &endash; 11,999.99.................. 35 7 24 12,000 &endash; 13,999.99.................. 25 7 25 b. If moneys have been appropriated to the fund created in 7 26 section 425.40, thetentativecredit or reimbursement for a 7 27 claimant described in section 425.17, subsection 2, paragraph 7 28 "b", shall be determined as follows: 7 29 (1) If the amount appropriated under section 425.40 plus 7 30 any supplemental appropriation made for a fiscal year for 7 31 purposes of this lettered paragraph is at least twenty-seven 7 32 million dollars, thetentativecredit or reimbursement shall 7 33 be determined in accordance with the following schedule: 7 34 Percent of property taxes 7 35 due or rent constituting 8 1 property taxes paid 8 2 If the household allowed as a credit or 8 3 income is: reimbursement: 8 4 $ 0 &endash; 5,999.99.................100% 8 5 6,000 &endash; 6,999.99.................. 85 8 6 7,000 &endash; 7,999.99.................. 70 8 7 8,000 &endash; 9,999.99.................. 50 8 8 10,000 &endash; 11,999.99.................. 35 8 9 12,000 &endash; 13,999.99.................. 25 8 10 (2) If the amount appropriated under section 425.40 plus 8 11 any supplemental appropriation made for a fiscal year for 8 12 purposes of this lettered paragraph is less than twenty-seven 8 13 million dollars thetentativecredit or reimbursement shall be 8 14 determined in accordance with the following schedule: 8 15 Percent of property taxes 8 16 due or rent constituting 8 17 property taxes paid 8 18 If the household allowed as a credit or 8 19 income is: reimbursement: 8 20 $ 0 &endash; 5,999.99................. 50% 8 21 6,000 &endash; 6,999.99.................. 42 8 22 7,000 &endash; 7,999.99.................. 35 8 23 8,000 &endash; 9,999.99.................. 25 8 24 10,000 &endash; 11,999.99.................. 17 8 25 12,000 &endash; 13,999.99.................. 12 8 26 Sec. 13. Section 425.23, subsection 2, Code 1995, is 8 27 amended by striking the subsection. 8 28 Sec. 14. Section 425.23, subsection 3, paragraph a, Code 8 29 1995, is amended to read as follows: 8 30 a. A person who is eligible to file a claim for credit for 8 31 property taxes due and who has a household income of six 8 32 thousand dollars or less and who has an unpaid special 8 33 assessment levied against the homestead may file a claim with 8 34 the county treasurer that the claimant had a household income 8 35 of six thousand dollars or less and that an unpaid special 9 1 assessment is presently levied against the homestead. The 9 2 department shall provide to the respective treasurers the 9 3 forms necessary for the administration of this subsection. 9 4 The claim shall be filed not later than September 30 of each 9 5 year. Upon the filing of the claim, interest for late payment 9 6 shall not accrue against the amount of the unpaid special 9 7 assessment due and payable. The claim filed by the claimant 9 8 constitutes a claim for credit of an amount equal to the 9 9 actual amount due upon the unpaid special assessment, plus 9 10 interest, payable during the fiscal year for which the claim 9 11 is filed against the homestead of the claimant. However, 9 12 where the claimant is an individual described in section 9 13 425.17, subsection 2, paragraph "b", and thetentativecredit 9 14 is determined according to the schedule in section 425.23, 9 15 subsection 1, paragraph "b", subparagraph (2), the claim filed 9 16 constitutes a claim for credit of an amount equal to one-half 9 17 of the actual amount due and payable during the fiscal year. 9 18 The department of revenue and finance shall, upon the filing 9 19 of the claim with the department by the treasurer, pay that 9 20 amount of the unpaid special assessment during the current 9 21 fiscal year to the treasurer. The treasurer shall submit the 9 22 claims to the director of revenue and finance not later than 9 23 October 15 of each year. The director of revenue and finance 9 24 shall certify the amount of reimbursement due each county for 9 25 unpaid special assessment credits allowed under this 9 26 subsection. The amount of reimbursement due each county shall 9 27 be paid by the director of revenue and finance on October 20 9 28 of each year, drawn upon warrants payable to the respective 9 29 treasurer. There is appropriated annually from the general 9 30 fund of the state to the department of revenue and finance an 9 31 amount sufficient to carry out the provisions of this 9 32 subsection. The treasurer shall credit any moneys received 9 33 from the department against the amount of the unpaid special 9 34 assessment due and payable on the homestead of the claimant. 9 35 Sec. 15. Section 425.26, subsection 3, Code 1995, is 10 1 amended by striking the subsection. 10 2 Sec. 16. Section 435.26, subsection 1, paragraph a, Code 10 3 1995, is amended to read as follows: 10 4 a. A mobile home, modular home, or manufactured home which 10 5 is located outside a mobile home park shall be converted to 10 6 real estate by being placed on a permanent foundation and 10 7 shall be assessed for real estate taxes. A home, after 10 8 conversion to real estate, is eligible for the homestead 10 9 income tax credit and the military tax exemption as provided 10 10 in sections425.2422.11 and 427.3. 10 11 Sec. 17. Section 441.73, subsection 4, Code 1995, is 10 12 amended to read as follows: 10 13 4. The executive council shall transfer for the fiscal 10 14 year beginning July 1, 1992, and each fiscal year thereafter, 10 15 from funds established in sections 405A.8, 425.1,and 426.1, 10 16 an amount necessary to pay litigation expenses. However, the 10 17 amount of funds transferred to the litigation expense fund for 10 18 the fiscal year beginning July 1, 1992, shall not exceed three 10 19 hundred fifty thousand dollars and the amount of the fund for 10 20 the succeeding fiscal years shall not exceed seven hundred 10 21 thousand dollars. The executive council shall determine 10 22 annually the proportionate amounts to be transferred from the 10 23 three separate funds. At any time when no litigation is 10 24 pending or in progress the balance in the litigation defense 10 25 fund shall not exceed one hundred thousand dollars. Any 10 26 excess moneys shall be transferred in a proportionate amount 10 27 back to the funds from which they were originally transferred. 10 28 DIVISION III 10 29 APPLICABILITY DATES 10 30 Sec. 18. APPLICABILITY DATES. 10 31 1. Section 1 of division I of this Act applies to tax 10 32 years beginning on or after January 1, 1996. 10 33 2. Section 2 of division I of this Act and division II of 10 34 this Act apply to property taxes due and payable on or after 10 35 January 1, 1996. 11 1 EXPLANATION 11 2 Division I of the bill changes the homestead credit from a 11 3 property tax credit to a refundable individual income tax 11 4 credit. The income tax credit will first apply to the tax 11 5 year beginning January 1, 1996, for property taxes paid on the 11 6 first $4,850 of the homestead during the 1996-1997 fiscal 11 7 year. The last homestead property tax credit will be received 11 8 for taxes payable during the 1995-1996 fiscal year. Division 11 9 II of the bill provides all coordinating changes. 11 10 The bill provides applicability date provisions. 11 11 LSB 1958HH 76 11 12 mg/jw/5
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