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COMMITTEE REPORT
April 22, 2004
H. 4440
S. Printed 4/22/04--H. [SEC 4/26/04 11:27 AM]
Read the first time January 13, 2004.
To whom was referred a Bill (H. 4440) 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 2 by striking / 2003 / on line 40, page 1, and inserting / 2004 /.
When amended SECTION 2 shall read:
SECTION 2. The amendment to Section 12-37-224 of the 1976 Code contained in this act is effective for property tax years beginning after 2004.
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 governments 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 $3,200,000 in FY 2005 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 $2,600,000 and shifts this amount among the other classes of property. This bill also caps the total taxes levied on such boats at $1,500. We estimate that the $1,500 maximum ad valorem tax cap on these boats will increase the revenue shift by $600,000 bringing the total shift to $3,200,000 in FY 2005.
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, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
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 PROVIDE A CAP ON THE MAXIMUM AD VALOREM TAXATION WHICH MAY BE LEVIED ON SUCH A BOAT FOR ANY 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) 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.
(B) The maximum ad valorem taxation on such a boat for any year is one thousand five hundred dollars."
SECTION 2. The amendment to Section 12-37-224 of the 1976 Code contained in this act is effective for property tax years beginning after 2003.
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