HB 647 — LIMITS ON VALUATION OF CERTAIN PROPERTY

HOUSE TAXATIONBILL AND647 REVENUE54TH COMMITTEELEGISLATURE SUBSTITUTE- FORSTATEOFNEWMEXICO- HOUSEFIRST BILLSESSION, 6472019 54INTRODUCED THBY LEGISLATURE-Matthew STATEMcQueen OFPursuant NEWto MEXICOHouse -Rule FIRST24-1, SESSIO,this 2019document 4incorporates 6amendments 8that 10have ANbeen ACTadopted RELATINGprior TOto PROPERTYconsideration TAX;of this measure by the House.

LIMITINGIt Ais THREEa PERCENTtool LIMITATIONto ONshow INCREASESthe INamendments VALUATIONin OFcontext RESIDENTIALand PROPERTYis TOnot PROPERTYto THATbe ISused OCCUPIEDfor BYthe THEpurpose OWNERof ASamendments. THE OWNER'S PRINCIPAL PLACE OF RESIDENCE;

PROVIDINGAN AACT TENRELATING PERCENTTO LIMITATION ON INCREASES IN VALUATION OF RESIDENTIAL PROPERTY THATTAX; IS NOT OCCUPIED BY THE OWNER AS THE OWNER'S PRINCIPAL PLACE OF RESIDENCE.

ePROVIDING tTHAT 17A wLIMITATION lON nh dINCREASES 18IN BEVALUATION ITOF ENACTEDRESIDENTIAL BYPROPERTY THEBE LEGISLATURELIMITED OFTO THEg STATEo OFOWNER-OCCUPIED NEWRESIDENTIAL MEXICO:PROPERTY.

=t =hr 19g SECTIONe 1.i k h r i s BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Sectionh 7-36-21.2, NMSAt, 1978SECTION (being1. Laws 2000, a l i a e r 20 Chapter 10, Section 2, as amended) is amended to read:

aSection t7-36-21.2 mNMSA m1978 21(being "7-36-21.2.Laws 2000, e u g e b l e e h Chapter 10, Section 2, as amended) is amended to read:

LIMITATIONn ONd INCREASES IN VALUATION OF d ri e= 22= RESIDENTIALo PROPERTY.--h c"7-36-21.2. e s k 23 A.

ExceptLIMITATION asON providedINCREASES inIN SubsectionsVALUATION BOF throughl D] of e a n b 24,d thisi section,a residentialº propertye shallRESIDENTIAL bePROPERTY.-- valuedr ati its= ur [t currente andw correctd valuem ina accordancen witho theA. provisions of .214536.4 HTRC/HB 647 the Property Tax Code.

[providedResidential thatproperty ]shall B.be valued at its d m :

Forb thee 2001d [ands subsequent]º througho 2020t taxn years,= the.213751.2 values ofk am propertye ine anya taxn yeare shalld notr exceede thel higheru of[ oneA hundredd threecurrent percentand ofcorrect the value in theaccordance taxwith year prior to the taxprovisions year in which the property is being valued or one hundred six and one-tenth percent of the valueProperty inTax theCode; tax year two years prior to the tax year in which the property is being valued.

[Thisprovided limitationthat ]for C.the 2001 and subsequent tax years, the value of a property in any tax year shall not exceed the higher of one hundred three percent of the value in the tax year prior to the tax year in which the property is being valued or one hundred six and one-tenth percent of the value in the tax year two years prior to the tax year in which the property is being valued.

ForThis thelimitation 2021on andincreases subsequentin tax years, the value ofdoes a residential property that is occupied by the owner as the owner's principal place of residence in any tax year shall not exceedapply theto: higher of one hundred three percent of the value in the tax year prior to the tax year in which the property is being valued or one hundred six and one-tenth percent of the value in the tax year two years prior to the tax year in which the property is being valued.

e e 17 D.

For the 2021 and subsequent tax years, the value e e n d 18 of a residential property that is not occupied by the owner as = = l ] 19 the owner's principal place of residence in any tax year shall a l r i 20 not exceed the higher of one hundred ten percent of the value t e a t in the tax year prior to the tax year in which the property is m m 21 e d being valued or one hundred twenty-one percent of the value in r e 22 c e r c 23 the tax year two years prior to the tax year in which the e a n b 24 property is being valued.

u [ E.

The limitations on increases in value [does] .214536.4 - 2 - HTRC/HB 647 pursuant to Subsections B through D of this section shall not apply to:

or[or ] (3) valuation of a residential property in any h tax year in which:

u » r (a) a change of ownership of the t h g e l i property occurred in the year immediately prior to the tax year h r i s for which the value of the property for property taxation h , e h purposes is being determined;

or t u g e b l e e , gh (b) the use or zoning of the property n d d i = = o h has changed in the year prior to the tax year.year;

or l ] b ,d i a º r (4) residential property that is not occupied e r = t e 17w [B.]d F.m a n o by the owner as the owner's principal place of residence.

If a change of ownership of residential e e n d 18 property occurred in the year immediately prior to the tax year = = l ] 19 for which the value of the property for property taxation a l r i 20 purposes is being determined, the value of the property shall t e a t be its current and correct value as determined pursuant to the m m: 21 e d general valuation provisions of the Property Tax Code.

b r e 22t cº o t n = .213751.2 s k m e - 2 - e a n e d r ce 23l [C.]u G.[ A d B.

ToIf assurea thatchange theof valuesownership of residential e a n b 24 property foroccurred property taxation purposes are at current and u [ correct values in allthe countiesyear immediately prior to application of the .214536.4tax -year 3for -which HTRC/HBthe 647value limitation in Subsection [A ] B of this section, the departmentproperty shallfor determineproperty fortaxation thepurposes 2000is taxbeing yeardetermined, the salesvalue ratioof pursuantthe toproperty Sectionshall 7-36-18be NMSAits 1978current or,and ifcorrect avalue salesas ratio cannot be determined pursuant to thatthe section,general conductvaluation aprovisions sales-ratioof analysis using both independent appraisals by the departmentProperty andTax sales.Code.

IfC. the sales ratio for a county for the 2000 tax year is less than eighty-five, as measured by the median ratio of value for property taxation purposes to sales price or independent appraisal by the department, the county shall not be subject to the limitations of Subsection [A ] B of this section and shall conduct a reassessment of residential property in the county so that, by the 2003 tax year, the sales ratio is at least eighty-five.

AfterTo suchassure reassessment,that the limitationvalues onof increasesresidential inproperty valuationfor inproperty thistaxation sectionpurposes shallare applyat current and correct values in thoseall counties inprior theto earlierapplication of the 2004limitation taxin yearSubsection orA of this section, the firstdepartment taxshall yeardetermine followingfor the 2000 tax year that the county has a e e 17 sales ratio ofpursuant eighty-fiveto orSection higher,7-36-18 asNMSA measured1978 byor, theif mediana esales e n d 18 ratio ofcannot valuebe fordetermined propertypursuant taxation purposes to salesthat valuesection, orconduct =a =sales-ratio lanalysis ]using 19both independent appraisalappraisals by the department.department and sales.

Thereafter,If the sales ratio for a lcounty rfor ithe 202000 limitationtax onyear increasesis inless valuationthan ofeighty-five, residentialas propertymeasured tby ethe amedian tratio h of value for property taxation purposes into sales price or u » r independent appraisal by the department, the county shall not t h g e l i be subject to the limitations of Subsection A of this section h r i s and shall applyconduct toa mreassessment mof 21residential property in the h , e dh subsequentcounty so that, by the 2003 tax yearsyear, inthe allsales counties.ratio is at t u g e b l e e , gh least eighty-five.

After such reassessment, the limitation on n d d i = = o h increases in valuation in this section shall apply in those l ] b ,d i a º r ecounties 22in cthe earlier of the 2004 tax year or the first tax e r c= 23t [D.]e H.w d m a n o year following the tax year that the county has a sales ratio d m :

Theb provisionsr ofe thist sectionº doo nott applyn e= a.213751.2 ns bk 24m toe residential- property3 for- anye taxa yearn ine whichd ther propertye l u [ isA subjectd toof eighty-five or higher, as measured by the valuationmedian limitationratio inof Sectionvalue 7-36-21.3for .214536.4property -taxation 4purposes -to HTRC/HBsales 647value NMSAor 1978.independent appraisal by the department.

[E.]Thereafter, I.the limitation on increases in valuation of residential property for property taxation purposes in this section shall apply to subsequent tax years in all counties.

AsD. used in this section:

(1)The "changeprovisions of ownership"this meanssection ado transfernot apply to aresidential transfereeproperty byfor aany transferortax ofyear allin orwhich any part of the transferor'sproperty legalis orsubject equitableto ownershipthe interestvaluation limitation in residentialSection property7-36-21.3 exceptNMSA for1978. a transfer:

[(1)]E. (a) to a trustee for the beneficial use of the spouse of the transferor or the surviving spouse of a deceased transferor;

[(2)]As (b)used toin thethis spousesection, "change of theownership" transferormeans thata takestransfer effectto upona thetransferee deathby a transferor of all or any part of the transferor;transferor's legal or equitable ownership interest in residential property except for a transfer:

[(3)](1) (c)to thata creates,trustee transfersfor the beneficial use of the spouse of the transferor or terminates,the solelysurviving betweenspouse spouses,of anya co-owner'sdeceased interest;h transferor;

[(4)]u (d)» r (2) to athe childspouse of the transferor,transferor whothat occupiestakes thet propertyh asg thate person'sl principali residenceeffect atupon the timedeath of transfer;the transferor;

providedh thatr thei firsts subsequent(3) tax e e 17 year in which that personcreates, doestransfers notor qualifyterminates, forh the, head of e eh nsolely dbetween 18spouses, householdany exemptionco-owner's oninterest; that property, a change of ownership = = l ] 19 shall be deemed to have occurred;

at lu rg ie 20b [(5)]l (e)e thate confirms, orgh corrects(4) to a tchild eof athe ttransferor, previouswho transferoccupies maden byd ad documenti that= was= recordedo inh the mproperty mas 21that eperson's dprincipal realresidence estateat records of the countytime inl which] theb real,d propertyi isa rº e 22 c e r cof 23transfer; located;

eprovided athat nthe bfirst 24subsequent [(6)]tax (f)year forin thee purposer of= quietingt ue [w thed titlem toa realn propertyo orwhich resolvingthat aperson disputeddoes locationnot ofqualify .214536.4for -the 5head -of HTRC/HBhousehold 647d am real: property boundary;

[(7)]b (g)r toe t º o t n = .213751.2 s k m e - 4 - e a revocablen truste byd ther transferore withl theu transferor,[ theA transferor'sd spouseexemption oron that property, a childchange of theownership transferorshall asbe beneficiary;deemed to have occurred;