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COMMITTEE REPORT
May 19, 2004
H. 4440
S. Printed 5/19/04--S.
Read the first time April 29, 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, 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, by striking all after the enacting words and inserting:
/ SECTION 1. Section 12-43-360 of the 1976 Code, as added by Act 30 of 2003, is amended to read:
"Section 12-43-360. (A) The governing body of a county by ordinance may reduce the assessment ratio otherwise applicable in determining the assessed value of general aviation aircraft subject to property tax in the county to a ratio not less than four percent of the fair market value of the general aviation aircraft. The ordinance must apply uniformly to all general aviation aircraft subject to property tax in the county.
(B) The governing body of a county by ordinance may reduce the assessment ratio otherwise applicable in determining the assessed value of boats subject to property tax in the county to a ratio not less than four percent of the fair market value of the boat. The ordinance must apply uniformly to all boats subject to property tax in the county. Before such an ordinance may be enacted, the governing body of any school district located in whole or in part in the county, by resolution, must approve the amount of the proposed reduction in the assessment ratio."
SECTION 2. Article 5, Chapter 37, Title 12 of the 1976 Code, is amended by adding:
"Section 12-37-712. In addition to any other provisions of law subjecting boats and boat motors to property tax in this State:
(1) A boat, including its motor if the motor is separately taxed, used in interstate commerce having a tax situs in this State and at least one other state is subject to property tax in this State. The value of such a boat must be determined based on the fair market value of the boat multiplied by a fraction representing the number of days present in this State. The fraction is determined by dividing the number of days the boat was present in this State by three hundred and sixty-five days. A boat used in interstate commerce must be physically present in this State on thirty days in the aggregate in a property tax year to become subject to ad valorem taxation.
(2) A boat, including its motor if the motor is separately taxed, which is not present in this State on December thirty-first and is not used exclusively in interstate commerce, is subject to property tax in this State if it is present within this State for sixty consecutive days or on ninety days in the aggregate in a property tax year. Upon written request by a tax official, the owner must provide documentation or logs relating to the whereabouts of the boat in question. Failure to produce requested documents creates a rebuttable presumption that the boat in question is taxable within this State."
SECTION 3. This act takes effect upon approval by the Governor. /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. 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 $5,100,000 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.
This bill, as amended, adds language to cap all boat and motor taxes at $1,500. Capping all remaining boat taxes at $1,500 would shift an additional estimated $1,900,000 to the other classes of property. In total, this bill, as amended would shift an estimated $5,100,000 of boat and motor taxes to all other classes of property.
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. Section 12-37-220(B) of the 1976 Code, as last amended by Act 69 of 2003, is further amended by adding an appropriately numbered item to read:
"( ) Beginning with calendar year 2004, the maximum amount of ad valorem taxation for any year which may be imposed on any boat and motor required to be registered, numbered, and titled under the laws of this State is one thousand five hundred dollars."
SECTION 3. The amendment to Section 12-37-224 of the 1976 Code contained in this act is effective for property tax years beginning after 2004.
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