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COMMITTEE REPORT
April 19, 2005
H. 3453
Introduced by Reps. Limehouse, Altman, Barfield, Bailey, Rice, Scarborough, Wilkins, Owens, Clemmons and Hagood
S. Printed 4/19/05--H.
Read the first time February 3, 2005.
To whom was referred a Bill (H. 3453) to amend Section 12-37-224, Code of Laws of South Carolina, 1976, relating to the classification of a motor home as real property for purposes of ad valorem taxes, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, in Section 12-37-220(38), as contained in Section 2, page 2, by striking subitem (b) and inserting:
/ (b) an amount of the fair market value of any watercraft, including those assessed pursuant to Section 12-37-224, sufficient to limit to one thousand five hundred dollars the total property tax on the watercraft for a property-tax year. /
Renumber sections to conform.
Amend title to conform.
ROBERT W. HARRELL, JR. for Committee.
REVENUE IMPACT 1/
This bill is not expected to have any impact on state or local revenues. Although the amount of assessed value would be decreased, local government are expected to adjust their millages to make up for the shortfalls. This bill would change the incidence of local property taxes by reducing the property taxes collected from these boats by $5,550,000 in FY 2006 and shifting this amount among the other classes of property.
Explanation
Under current law, a motor home on which the interest portion of indebtedness is deductible pursuant to the Internal Revenue Code as an interest expense on a qualified primary or second residence is also a primary or second residence for purposes of ad valorem property taxation and is considered real property rather than personal property for property tax purposes. These units are commonly known as recreation vehicles. This bill adds boats to this classification if the interest portion of indebtedness is deductible pursuant to the Internal Revenue Code as an interest expense on a qualified primary or second residence. In order to qualify for the federal interest deduction, a boat would have to meet the same requirements to claim interest on a home. This basically means a boat must have living/eating quarters, sleeping quarters, and bathroom facilities. This effectively changes the assessment ratio on these boats from 10.5% to 6.0%, reduces the amount of revenue collected on these boats by $2,830,000 and shifts this amount among the other classes of property. This bill also caps the total taxes levied on any boats and motors at $1,500. We estimate that the $1,500 maximum ad valorem tax cap on boats and motors will increase the revenue shift by $2,720,000 bringing the total shift to $5,550,000 in FY 2006.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.
TO AMEND SECTION 12-37-224, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE CLASSIFICATION OF A MOTOR HOME AS REAL PROPERTY FOR PURPOSES OF AD VALOREM TAXES AND THE REQUIREMENTS NECESSARY FOR THAT CLASSIFICATION, SO AS TO INCLUDE BOATS WITHIN THE CLASSIFICATION IF THEY MEET THE SAME REQUIREMENTS, AND TO AMEND SECTION 12-37-220, AS AMENDED, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO EXEMPT A SUFFICIENT AMOUNT OF THE FAIR MARKET VALUE OF A WATERCRAFT AND OF THE COMBINED VALUE OF A WATERCRAFT AND ITS MOTOR, IF TAXED SEPARATELY, TO LIMIT TO ONE THOUSAND FIVE HUNDRED DOLLARS THE PROPERTY TAX DUE ON THE WATERCRAFT OR BOTH THE WATERCRAFT AND THE MOTOR, FOR ONE PROPERTY-TAX YEAR.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-37-224 of the 1976 Code, as added by Act 114 of 1999, is amended to read:
"Section 12-37-224. A motor home or boat on which the interest portion of indebtedness is deductible pursuant to the Internal Revenue Code as an interest expense on a qualified primary or second residence is also a primary or second residence for purposes of ad valorem property taxation in this State and is considered real property rather than personal property for property tax purposes."
SECTION 2. Section 12-37-220(B)(38) of the 1976 Code is amended to read:
"(38)(a) Watercraft and motors which that have an assessment of not more than fifty dollars.
(b) an amount of the fair market value of any watercraft, including those assessed pursuant to Section 12-37-224, and the combined fair market value of any watercraft and its motor, if taxed separately, sufficient to limit to one thousand five hundred dollars the total property tax on the watercraft for a property-tax year and to limit to one thousand five hundred dollars the total of the combined property tax on any one watercraft and its motor for a property-tax year."
SECTION 3. This act takes effect upon approval by the Governor and applies for property tax years beginning after 2004.
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