SUMMARY--Revises provisions governing property taxes on leasehold interests, possessory interests, beneficial interests and beneficial uses. (BDR 31-1198)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: No.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to taxation; clarifying the authority to appeal the property tax valuation of a leasehold interest, possessory interest, beneficial interest or beneficial use to the county and state boards of equalization; authorizing certain local governments to reduce the estimated revenue from property taxes in preparing budgets under certain circumstances; limiting the use of revenue from property taxes that was excluded from the final budget of a local government; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Chapter 354 of NRS is hereby amended by adding thereto a new section to read as follows:
As used in NRS 361.335 to 361.435, inclusive:
1. The term "property" includes a leasehold interest, possessory interest, beneficial interest or beneficial use of a lessee or user of property which is taxable pursuant to NRS 361.157 or 361.159.
2. Where the term "property" is read to mean a taxable leasehold interest, possessory interest, beneficial interest or beneficial use of a lessee or user of property, the term "owner" used in conjunction therewith must be interpreted to mean the lessee or user of the property.
Sec. 2 NRS 361.227 is hereby amended to read as follows:
361.2271. Any person determining the taxable value of real property shall appraise:
(a) The full cash value of:
(1) Vacant land by considering the uses to which it may lawfully be put, any legal or physical restrictions upon those uses, the character of the terrain, and the uses of other land in the vicinity.
(2) Improved land consistently with the use to which the improvements are being put.
(b) Any improvements made on the land by subtracting from the cost of replacement of the improvements all applicable depreciation and obsolescence. Depreciation of an improvement made on real property must be calculated at 1.5 percent of the cost of replacement for each year of adjusted actual age of the improvement, up to a maximum of 50 years.
2. The unit of appraisal must be a single parcel unless:
(a) The location of the improvements causes two or more parcels to function as a single parcel; or
(b) The parcel is one of a group of contiguous parcels which qualifies for valuation as a subdivision pursuant to the regulations of the Nevada tax commission.
3. The taxable value of a leasehold interest, possessory interest, beneficial interest or beneficial use for the purpose of NRS 361.157 or 361.159 must be determined in the same manner as the taxable value of the property would otherwise be determined if the lessee or user of the property was the owner of the property and it was not exempt from taxation, except that the taxable value so determined must be reduced by a percentage of the taxable value that is equal to the:
(a) Percentage of the property that is not actually leased by the lessee or used by the user during the fiscal year; and
(b) Percentage of time that the property is not actually leased by the lessee or used by the user during the fiscal year.
4. The taxable value of other taxable personal property, except mobile homes, must be determined by subtracting from the cost of replacement of the property all applicable depreciation and obsolescence. Depreciation of a billboard must be calculated at 1.5 percent of the cost of replacement for each year after the year of acquisition of the billboard, up to a maximum of 50 years.
5. The computed taxable value of any property must not exceed its full cash value. Each person determining the taxable value of property shall reduce it if necessary to comply with this requirement. A person determining whether taxable value exceeds full cash value or whether obsolescence is a factor in valuation may consider:
(a) Comparative sales, based on prices actually paid in market transactions.
(b) A summation of the estimated full cash value of the land and contributory value of the improvements.
(c) Capitalization of the fair economic income expectancy or fair economic rent.
A county assessor is required to make the reduction prescribed in this subsection if the owner calls to his attention the facts warranting it, if he discovers those facts during physical reappraisal of the property or if he is otherwise aware of those facts.
6. [The taxable value of property is not subject to challenge pursuant to subsection 5 on the basis that the right to the use and enjoyment of property that is owned by an entity exempt from taxation but is leased to or used by a person who is not exempt from taxation pursuant to a leasehold interest, possessory interest, beneficial interest or beneficial use has a lesser full cash value than the same right pursuant to an ownership interest.
7.] The Nevada tax commission shall by regulation establish:
(a) Standards for determining the cost of replacement of improvements of various kinds.
(b) Standards for determining the cost of replacement of personal property of various kinds. The standards must include a separate index of factors for application to the acquisition cost of a billboard to determine its replacement cost.
(c) Schedules of depreciation for personal property based on its estimated life.
(d) Criteria for the valuation of two or more parcels as a subdivision.
[8.] 7. In determining the cost of replacement of personal property for the purpose of computing taxable value, the cost of all improvements of the personal property, including any additions to or renovations of the personal property but excluding routine maintenance and repairs, must be added to the cost of acquisition of the personal property.
[9.] 8. The county assessor shall, upon the request of the owner, furnish within 15 days to the owner a copy of the most recent appraisal of the property.
[10.] 9. The provisions of this section do not apply to property which is assessed pursuant to NRS 361.320.
Sec. 3 Chapter 354 of NRS is hereby amended by adding thereto the provisions set forth as sections 4 and 5 of this act.
Sec. 4 1. In preparing a tentative budget, the governing body of a local government, except a school district, which determines that the amount of revenue to be received from taxes ad valorem during the ensuing fiscal year will be reduced because one or more lessees or users of property which is taxable pursuant to NRS 361.157 or 361.159 will be delinquent in paying the tax, may, upon approval by the executive director of the department of taxation, reduce the estimate of revenue from taxes ad valorem by the amount of the tax expected to be delinquent.
2. In adopting a final budget, the governing body of a local government, except a school district, shall reduce the estimate of revenue from taxes ad valorem by the amount determined pursuant to subsection 1, unless the governing body has determined since the preparation of the tentative budget that some or all of the tax expected to be delinquent will be paid. The governing body shall increase the estimate of revenue from taxes ad valorem by the amount of tax no longer expected to be delinquent, if any.
3. The provisions of this section do not affect the calculation of the limitation upon revenue from taxes ad valorem pursuant to NRS 354.59811 or any estimate of assessed valuation used to distribute revenue among local governments or determine the debt limit of the state, a local government or a school district.
Sec. 5 A local government, except a school district, that receives revenue from taxes ad valorem from a lessee or user of property which is taxable pursuant to NRS 361.157 or 361.159 shall deposit the revenue in the capital projects fund or a similar fund of the local government and use that revenue only for capital projects if the revenue was received in:
1. A fiscal year after the fiscal year the taxes were owed; or
2. The fiscal year the taxes are owed and the taxes were excluded from the estimate of revenue from taxes ad valorem for the local government pursuant to section 4 of this act.
Sec. 6 This act becomes effective on July 1, 1997.