A bill for an act establishing a partial exemption on property taxes for certain residential properties sold in disaster areas.

2025-2026 Regular Session

Provides a four-year partial property tax exemption (80/60/40/20%) for HUD-sold homes in disaster areas to owners with homestead credit.

Subcommittee recommends passage.

#disasters #propertytaxes #residentialproperty #taxexemptions

Purpose

HSB 271 establishes a four-year, partial exemption from property taxation for certain residential properties sold by the U.S. Department of Housing and Urban Development (HUD) to owners who are receiving the homestead tax credit. The exemption applies when the sale was intended to provide housing to individuals following a major disaster or disaster emergency, and the property is located in a designated disaster area. The bill aims to support disaster housing efforts by reducing the tax burden on eligible properties during the initial years after sale.

Key Provisions

Eligibility: Applies to residential property sold by HUD to an owner who is receiving the homestead tax credit under section 425.1. The sale must have been intended to provide housing after a major disaster or disaster emergency.

Geographic/Declaratory Trigger: The property must be located in a major disaster area as declared by the president or in a disaster emergency area proclaimed by the governor.

Exemption Duration: Four full assessment years beginning with the first full assessment year after the sale.

Exemption Amount: A partial exemption equal to a percentage of the property’s actual value, reducing the assessed value subject to taxation as follows:

Year 1 (first full assessment year after sale): 80%
Year 2: 60%
Year 3: 40%
Year 4: 20%

Mechanics: The exemption is described as a reduction in taxable value (a partial exemption) rather than a full exemption.

Affected Parties

HUD-purchased residential properties sold to owners receiving the homestead tax credit (section 425.1).

Properties located in areas designated as major disaster areas by the president or disaster emergency areas by the governor.

Local assessors and tax offices, which would apply the four-year, tiered exemption to eligible properties.

Procedural and Timeline Details

Introduced: February 27, 2025 (Code section amended: 427.1 to add new subsection 43).

Legislative action: Referred to Ways and Means.

Subcommittee action: Subcommittee (Jones, Siegrist, Wilson) recommended passage on March 12, 2025.

Scheduled/Reported: Subcommittee meeting noted for March 12, 2025; status indicates passage recommendation at the subcommittee level.

Potential Fiscal and Policy Implications

Local property tax revenues would be affected for four years on eligible properties due to staged exemptions.

Aligns disaster housing objectives with tax policy to incentivize HUD-furnished housing in disaster areas.

Practical administration would require verifying eligibility (HUD sale, homestead credit status, disaster declarations, and year-by-year exemption application).

This summary captures the substantive provisions and potential impact of HSB 271 as currently introduced and moving through the committee process.

Bill