House Taxation committee members passed a bill that would create a property tax levy for leased residential property at Tuesday’s meeting on a 9-4 vote.

 

House Bill 1143 sets the leased property levy would be set at $8.62 per $1,000 of taxable valuation and is defined as any single-family unit or structure consisting of two or more family units that is leased or rented.

 

Proponents of the bill argued leased property is unfairly taxed, noting it’s taxed the same as retail chains such as Wal-Mart, and renters feel the effects of being in that tax bracket.

 

Department of Revenue representative Mike Houdyshell said the addition of leased property as a tax levy presented short-term and long-term concerns. Houdyshell noted short-term concerns included an increased workload for counties. He said the long-term concerns were even more troubling.

 

“There’s going to be a tax shift,” said Houdyshell, alluding to the possibility of the current levies – agricultural, non-agricultural (commercial) and owner-occupied single-family dwellings – being increased.

 

Dean Krogman, of the S.D. Multi Housing Association, said the new category would not change revenue for school districts, but also testified a cost shift among the other tax levies would not take place “if growth” in leased property occurred.

 

A point Houdyshell contended was very uncertain.

 

“We don’t know what that tax impact would be, but we know it would be significant,” Houdyshell said.

 

The bill now moves to the House floor where it will be heard on Wednesday. For updates on the bill, check the ASBSD blog and bill tracker.