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COMMITTEE REPORT
April 20, 2006
H. 4737
Introduced by Reps. Edge, Clemmons, Mitchell, Bales, Chalk, Hiott, Rice, Sandifer, Kirsh, E.H. Pitts, J. Brown, Huggins, R. Brown and Cobb-Hunter
S. Printed 4/20/06--H.
Read the first time February 28, 2006.
To whom was referred a Bill (H. 4737) to amend the Code of Laws of South Carolina, 1976, by adding Section 12-37-225 so as to provide that federal or state income tax credits for low, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
DANIEL T. COOPER for Committee.
REVENUE IMPACT 1/
This bill is not expected to impact state revenues. We estimate this bill would change the incidence of local property taxes by shifting $2.8 million among and within the classes of property in FY 2006-07.
Explanation
This bill states federal or state income tax credits for low income housing may not be considered with respect to the valuation of real property or in determining the fair market value of real property for property tax purposes. According to data from the South Carolina State Housing Finance and Development Authority there were $8.8 million of federal income tax credits for low income housing in 2005. Not being able to use these credits would reduce the overall value of the property based upon the income approach to value. Based on data from the South Carolina State Housing Finance and Development Authority and conversations with local county officials, we estimate this bill would change the incidence of local property taxes by shifting $2.8 million among and within the classes of property in FY 2006-07.
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 THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-37-225 SO AS TO PROVIDE THAT FEDERAL OR STATE INCOME TAX CREDITS FOR LOW INCOME HOUSING MAY NOT BE CONSIDERED WITH RESPECT TO THE VALUATION OF REAL PROPERTY OR IN DETERMINING THE FAIR MARKET VALUE OF REAL PROPERTY FOR PROPERTY TAX PURPOSES, AND TO PROVIDE THAT FOR PROPERTIES THAT HAVE DEED RESTRICTIONS IN EFFECT THAT PROMOTE OR PROVIDE FOR LOW INCOME HOUSING, THE INCOME APPROACH MUST BE THE METHOD OF VALUATION TO BE USED.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 37, Title 12 of the 1976 Code is amended by adding:
"Section 12-37-225. (A) Federal or state income tax credits for low income housing may not be taken into consideration with respect to the valuation of real property or in determining the fair market value of real property for property tax purposes. For properties that have deed restrictions in effect that promote or provide for low income housing, the income approach must be the method of valuation to be used.
(B) For purposes of this section, 'low income housing' means housing intended for occupancy by households with incomes not exceeding eighty percent of area median income, adjusted for household size, as determined by the United States Department of Housing and Urban Development."
SECTION 2. This act takes effect upon approval by the Governor and is effective beginning with taxes to be assessed for the year of its enactment.
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