SUMMARY--Phases out depreciation on improvements and mobile homes for purposes of determining assessed valuation for levy of property taxes and authorizes certain compensatory payments for taxpayers with lower incomes. (BDR 32-519)
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; reducing year by year the depreciation allowed in assessing improvements and mobile homes for purposes of property taxes; authorizing cities and counties to make compensatory payments to offset the effect of the graduated decrease in depreciation for certain taxpayers with lower incomes; 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 361 of NRS is hereby amended by adding thereto a new section to read as follows:
1. In determining the taxable value of an improvement, the person making the determination shall reduce the amount of the depreciation otherwise required to be applied pursuant to NRS 361.227 and 361.229 by the percentage shown in the following table for the fiscal year in which the determination is made:
1997-1998 10 percent
1998-1999 20 percent
1999-2000 30 percent
2000-2001 40 percent
2001-2002 50 percent
2002-2003 60 percent
2003-2004 70 percent
2004-2005 80 percent
2005-2006 90 percent
2. In establishing the value of mobile homes, the Nevada tax commission shall reduce the amount of the depreciation otherwise required to be applied pursuant to subsection 3 of NRS 361.325 by the percentage shown in the table set forth in subsection 1 for the year in which the value is established.
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] Except as otherwise provided in section 1 of this act, 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. 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. 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. The provisions of this section do not apply to property which is assessed pursuant to NRS 361.320.
Sec. 3 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] at the cost of replacement of the improvements . [all applicable depreciation and obsolescence. Except as otherwise provided in section 1 of this act, 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] is 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. 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. 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. The provisions of this section do not apply to property which is assessed pursuant to NRS 361.320.
Sec. 4 NRS 361.260 is hereby amended to read as follows:
361.2601. Each year, the county assessor, except as otherwise required by a particular statute, shall ascertain by diligent inquiry and examination all real and secured personal property in his county which is subject to taxation, and also the names of all persons, corporations, associations, companies or firms owning the property. He shall then determine the taxable value of all such property and he shall then list and assess it to the person, firm, corporation, association or company owning it. He shall take the same action between May 1 and the following April 30, with respect to personal property which is to be placed on the unsecured tax roll.
2. At any time before the lien date for the following fiscal year, the county assessor may include additional personal property and mobile homes on the secured tax roll if the owner of the personal property or mobile home owns real property within the same taxing district which has an assessed value that is equal to or greater than the taxes for 3 years on both the real property and the personal property or mobile home, plus penalties. Personal property and mobile homes in the county on July 1, but not on the secured tax roll for the current year, must be placed on the unsecured tax roll for the current year.
3. An improvement on real property in existence on July 1 whose existence was not ascertained in time to be placed on the secured roll for that tax year and which is not governed by subsection 4 must be placed on the unsecured tax roll.
4. The value of any property apportioned among counties pursuant to NRS 361.320, 361.321 and 361.323 must be added to the central assessment roll at the assessed value established by the Nevada tax commission or as established pursuant to an appeal to the state board of equalization.
5. In arriving at the taxable value of all public utilities of an intracounty nature, the intangible or franchise element must be considered as an addition to the physical value and a portion of the taxable value.
6. In addition to the inquiry and examination required in subsection 1, for any property not physically reappraised in the current assessment year, the county assessor shall determine its assessed value for that year by applying a factor for improvements, if any, and a factor for land to the assessed value for the preceding year. The factor for improvements must reasonably represent the change, if any, in the taxable value of typical improvements in the area since the preceding year . [, and must take into account all applicable depreciation and obsolescence.] The factor for improvements must be adopted by the Nevada tax commission. The factor for land must be developed by the county assessor and approved by the commission. The factor for land must be so chosen that the median ratio of the assessed value of the land to the taxable value of the land in each area subject to the factor is not less than 30 percent nor more than 35 percent.
7. The county assessor shall physically reappraise all real property at least once every 5 years.
Sec. 5 NRS 361.325 is hereby amended to read as follows:
361.3251. On or before the [1st] first Monday in June of each year, the Nevada tax commission shall:
(a) Fix and establish the valuation for assessment purposes of all mobile homes in the state.
(b) Classify land and fix and establish the valuation thereof for assessment purposes. The classification of agricultural land must be made on the basis of crop, timber or forage production, either in tons of crops per acre, board feet or other unit, or animal unit months of forage. An animal unit month is the amount of forage which is necessary for the complete sustenance of one animal unit for 1 month. One animal unit is defined as one cow and calf, or its equivalent, and the amount of forage necessary to sustain one animal unit for 1 month is defined as 900 pounds of dry weight forage.
2. The valuation of mobile homes and land so fixed and established is for the next succeeding year and is subject to equalization by the state board of equalization.
3. Except as otherwise provided in section 1 of this act:
(a) In establishing the value of new mobile homes sold on or after July 1, 1982, the Nevada tax commission shall classify them according to those factors which most closely determine their useful lives.
(b) In establishing the value of other mobile homes, the commission shall begin with the retail selling price and depreciate it by 5 percent per year, but not below 20 percent of its original amount.
4. The Nevada tax commission shall cause to be placed on the assessment roll of any county property found to be escaping taxation coming to its knowledge after the adjournment of the state board of equalization. This property must be placed upon the assessment roll [prior to] before the delivery thereof to the ex officio tax receiver. If such property cannot be placed upon the assessment roll of the proper county within the proper time, it must be placed upon the tax roll for the next ensuing year, in addition to the assessment for the current year, if any, and taxes thereon must be collected for the prior year in the same amount as though collected upon the prior year's assessment roll.
5. The Nevada tax commission shall not raise or lower any valuations established by the state board of equalization unless, by the addition to any assessment roll of property found to be escaping taxation, it is necessary to do so.
6. [Nothing in this section provides] This section does not provide an appeal from the acts of the state board of equalization to the Nevada tax commission.
Sec. 6 NRS 361.325 is hereby amended to read as follows:
361.3251. On or before the first Monday in June of each year, the Nevada tax commission shall:
(a) Fix and establish the valuation for assessment [purposes] of all mobile homes in the state.
(b) Classify land and fix and establish the valuation thereof for assessment . [purposes.] The classification of agricultural land must be made on the basis of crop, timber or forage production, either in tons of crops per acre, board feet or other unit, or animal unit months of forage. An animal unit month is the amount of forage which is necessary for the complete sustenance of one animal unit for 1 month. One animal unit is defined as one cow and calf, or its equivalent, and the amount of forage necessary to sustain one animal unit for 1 month is defined as 900 pounds of dry weight forage.
2. The valuation of mobile homes and land so fixed and established is for the next succeeding year and is subject to equalization by the state board of equalization.
3. [Except as otherwise provided in section 1 of this act:
(a)] In establishing the value of [new] mobile homes [sold on or after July 1, 1982,] the Nevada tax commission shall classify them according to those factors which most closely determine their [useful lives.
(b) In establishing the value of other mobile homes, the commission shall begin with the retail selling price and depreciate it by 5 percent per year, but not below 20 percent of its original amount.] cost of replacement.
4. The Nevada tax commission shall cause to be placed on the assessment roll of any county property found to be escaping taxation coming to its knowledge after the adjournment of the state board of equalization. This property must be placed upon the assessment roll before the delivery thereof to the ex officio tax receiver. If such property cannot be placed upon the assessment roll of the proper county within the proper time, it must be placed upon the tax roll for the next ensuing year, in addition to the assessment for the current year, if any, and taxes thereon must be collected for the prior year in the same amount as though collected upon the prior year's assessment roll.
5. The Nevada tax commission shall not raise or lower any valuations established by the state board of equalization unless, by the addition to any assessment roll of property found to be escaping taxation, it is necessary to do so.
6. This section does not provide an appeal from the acts of the state board of equalization to the Nevada tax commission.
Sec. 7 NRS 244.1505 is hereby amended to read as follows:
244.15051. A board of county commissioners may expend money for any purpose which will provide a substantial benefit to the inhabitants of the county. The board may grant all or part of the money to a private organization, not for profit, to be expended for the selected purpose.
2. A grant to a private organization must be made by resolution which must specify:
(a) The purpose of the grant;
(b) The maximum amount to be expended from the grant; and
(c) Any conditions or other limitations upon its expenditure.
3. A board of county commissioners may make an annual compensatory payment equal to the amount by which the tax levied upon the home of a taxpayer for that fiscal year was increased pursuant to section 1 of this act to each taxpayer who is eligible for a homeowner's refund pursuant to NRS 361.833 or for low-income home energy assistance as defined in NRS 422.045.
Sec. 8 NRS 244.1505 is hereby amended to read as follows:
244.15051. A board of county commissioners may expend money for any purpose which will provide a substantial benefit to the inhabitants of the county. The board may grant all or part of the money to a private organization, not for profit, to be expended for the selected purpose.
2. A grant to a private organization must be made by resolution which must specify:
(a) The purpose of the grant;
(b) The maximum amount to be expended from the grant; and
(c) Any conditions or other limitations upon its expenditure.
3. A board of county commissioners may make an annual compensatory payment equal to the amount by which the tax levied upon the home of a taxpayer for that fiscal year was increased [pursuant to section 1 of this act] by basing its assessed valuation upon the cost of replacement instead of allowing the depreciation provided for the fiscal year 1996-1997 under NRS 361.227, 361.229 or 361.325 as those sections existed during that fiscal year to each taxpayer who is eligible for a homeowner's refund pursuant to NRS 361.833 or for low-income home energy assistance as defined in NRS 422.045.
Sec. 9 Chapter 268 of NRS is hereby amended by adding thereto a new section to read as follows:
The governing body of an incorporated city may make an annual compensatory payment equal to the amount by which the tax levied upon the home of a taxpayer for that fiscal year was increased pursuant to section 1 of this act to each taxpayer who is eligible for a homeowner's refund pursuant to NRS 361.833 or for low-income home energy assistance as defined in NRS 422.045.
Sec. 10 Section 9 of this act is hereby amended to read as follows:
Sec. 9. The governing body of an incorporated city may make an annual compensatory payment equal to the amount by which the tax levied upon the home of a taxpayer for that fiscal year was increased [pursuant to section 1 of this act] by basing its assessed valuation upon the cost of replacement instead of allowing the depreciation provided for the fiscal year 1996-1997 under NRS 361.227, 361.229 or 361.325 as those sections existed during that fiscal year to each taxpayer who is eligible for a homeowner's refund pursuant to NRS 361.833 or for low-income home energy assistance as defined in NRS 422.045.
Sec. 11 NRS 361.229 is hereby repealed.
Sec. 12 1. This section and sections 1, 2, 5, 7 and 9 of this act become effective on July 1, 1997.
2. Sections 3, 4, 6, 8, 10 and 11 of this act become effective on July 1, 2006.
3. Section 1 of this act expires by limitation on July 1, 2006.
TEXT OF REPEALED SECTION
361.229Adjustment of actual age of improvements in computation of depreciation.
1. The actual age of each improvement made on a parcel of land must be adjusted, for the purpose of computing depreciation, when any addition is made or replacement is made whose cost, added to the cost of any prior replacements, is at least 10 percent of the cost of replacement of the improvement after the work is done. For the purposes of this section, "replacement" does not include changing or adding finish or covering to floors or walls, changing or adding small appliances, or other normal maintenance of the improvement in a good condition.
2. Except as otherwise provided in subsection 3, the amount of the reduction must be the product of the prior actual age multiplied by the ratio of the cost of the replacement or addition to the cost of replacement of the improvement after the work is done.
3. The amount of the reduction for additions which increase the floor area of the improvement may be calculated by multiplying the prior actual age of the improvement by the ratio of the number of square feet of additional floor area to the total number of square feet of the improvement including the addition.