HB 1086: Conversation on leased residential tax class continues

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HB 1086: Conversation on leased residential tax class continues

The debate about adding a leased residential property tax classification started on Thursday (1/27).


“What we don’t have is a category for those people that live in a property, but don’t own it,” Rep. Don Haggar, the bill’s sponsor, testified. “(House Bill 1086) just creates the category.”


House Taxation committee members expressed interest in creating the new category with a 12-3 vote to pass HB 1086, which creates a leased residential property classification.


Senate Bill 100 from last year’s session called for the implementation of a similar process and passed both legislative chambers, but was vetoed by Gov. Dennis Daugaard and not able to be revived by legislators.


Rep. Haggar said the bill does not set a levy for leased property, which is currently taxed as commercial property, but sets up a process for collection of leased property tax collection throughout South Dakota.


“(HB 1086) doesn’t contemplate or dictate today any changes in taxation,” Rep. Haggar said, adding that the bill provides much needed data collection on leased residential property.


The data sought from HB 1086 already exists, according to South Dakota Department of Revenue Director of Property and Special Taxes Mike Houdyshell.


“We provided the data to the proponents,” Houdyshell testified, noting that his office collected the information for Brown, Lincoln, Minnehaha and Pennington counties at the request of the South Dakota Multi-Housing Association.


“These are not estimates, these are real numbers. In just these four counties…you’re looking at about $15.6 million in lost local effort.”


Rep. Haggar noted the need that’s developed in the state for affordable leased residential property.


“There’s a need for this kind of housing to attract workforce to the state,” Rep. Haggar said. “I think it’s important that we have quality housing for the workforce.”


An additional tax classification would result in a responsibility shift for another class and leased residential property is growing, said Houdyshell.


“These properties are being built currently,” Houdyshell said. “I don’t know if (HB 1086) would spur development.”


ASBSD is monitoring the bill, which now heads to the House floor for debate. For updates, check out the ASBSD Blog, Twitter feed and Bill Tracker page.

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