SENATE BILL NO. 3
INTRODUCED BY S. DOHERTY
A BILL FOR AN ACT ENTITLED: "AN ACT REVISING THE PROPERTY TAX ASSISTANCE PROGRAM AND THE ELDERLY HOMEOWNER AND RENTER PROPERTY TAX CREDIT; INCREASING THE INCOME THRESHOLDS FOR ELIGIBILITY UNDER THE PROPERTY TAX ASSISTANCE PROGRAM; REVISING THE DEFINITIONS OF "GROSS HOUSEHOLD INCOME" AND "INCOME" TO EXCLUDE ANY PENSION OR ANNUITY, RAILROAD RETIREMENT ACT BENEFITS, AND FEDERAL SOCIAL SECURITY PAYMENTS; ADJUSTING THE ELDERLY HOMEOWNER AND RENTER PROPERTY TAX CREDIT MULTIPLIER; EXPANDING THE ELDERLY HOMEOWNER AND RENTER PROPERTY TAX CREDIT; AMENDING SECTIONS 15-6-134, 15-30-171, AND 15-30-176, MCA; AND PROVIDING EFFECTIVE DATES AND APPLICABILITY DATES."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-6-134, MCA, is amended to read:
"15-6-134. Class four property -- description -- taxable percentage. (1) Class four property includes:
(a) subject to 15-6-201(1)(z) and (1)(aa) and subsections (1)(f) and (1)(g) of this section, all land, except that specifically included in another class;
(b) subject to 15-6-201(1)(z) and (1)(aa) and subsections (1)(f) and (1)(g) of this section, all improvements, including trailers, manufactured homes, or mobile homes used as a residence, except those specifically included in another class;
(c) the first $100,000 or less of the taxable market value of any improvement on real property, including trailers,
manufactured homes, or mobile homes, and appurtenant land not exceeding 5 acres owned or under contract for deed and
actually occupied for at least 7 months a year as the primary residential dwelling of any person whose total income from all
sources, including net business income and otherwise tax-exempt income of all types but not including social security
income paid directly to a nursing home, is not more than $15,000 $22,500 for a single person or $20,000 $27,500 for a
married couple or a head of household, as adjusted according to subsection (2)(b)(ii). For the purposes of this subsection
(1)(c), net business income is gross income less ordinary operating expenses but before deducting depreciation or depletion
allowance, or both.
(d) all golf courses, including land and improvements actually and necessarily used for that purpose, that consist of at least nine holes and not less than 700 lineal yards;
(e) subject to 15-6-201(1)(z), all improvements on land that is eligible for valuation, assessment, and taxation as agricultural land under 15-7-202, including 1 acre of real property beneath improvements on land described in 15-6-133(1)(c). The 1 acre must be valued at market value.
(f) (i) single-family residences, including trailers, manufactured homes, or mobile homes;
(ii) rental multifamily dwelling units;
(iii) appurtenant improvements to the residences or dwelling units, including the parcels of land upon which the residences and dwelling units are located and any leasehold improvements; and
(iv) vacant residential lots; and
(g) (i) commercial buildings and the parcels of land upon which they are situated; and
(ii) vacant commercial lots.
(2) Class four property is taxed as follows:
(a) (i) Except as provided in 15-24-1402 or 15-24-1501 and subsection (2)(a)(ii) of this section, property described in subsections (1)(a), (1)(b), (1)(e), (1)(f), and (1)(g) of this section is taxed at 3.794% of its taxable market value in tax year 1999.
(ii) The taxable percentage rate in subsection (2)(a)(i) must be adjusted downward by subtracting 0.0835 percentage points each year until the tax rate is equal to or less than 3.46%.
(b) (i) Property qualifying under the property tax assistance program in subsection (1)(c) is taxed at the rate provided in subsection (2)(a)(ii) of its market value multiplied by a percentage figure based on income and determined from the following table:
Income Income Percentage
Single Person Married Couple Multiplier
Head of Household
$0 - $ 6,000 13,501 $0 -$ 8,000 15,500 20%
6,001 13,500 - 9,200 16,700 8,001 15,501 - 14,000 21,500 50%
9,201 16,701 - 15,000 22,500 14,001 21,501 - 20,000 27,500 70%
(ii) The income levels contained in the table in subsection (2)(b)(i) must be adjusted for inflation annually by the department. The adjustment to the income levels is determined by:
(A) multiplying the appropriate dollar amount from the table in subsection (2)(b)(i) by the ratio of the PCE for the second quarter of the year prior to the year of application to the PCE for the second quarter of 1995; and
(B) rounding the product thus obtained to the nearest whole dollar amount.
(iii) "PCE" means the implicit price deflator for personal consumption expenditures as published quarterly in the Survey of Current Business by the bureau of economic analysis of the U.S. department of commerce.
(c) Property described in subsection (1)(d) is taxed at one-half the taxable percentage rate established in subsection (2)(a)(i).
(3) Within the meaning of comparable property, as defined in 15-1-101, property assessed as commercial property is comparable only to other property assessed as commercial property and property assessed as other than commercial property is comparable only to other property assessed as other than commercial property."
Section 2. Section 15-30-171, MCA, is amended to read:
"15-30-171. Residential property tax credit for elderly -- definitions. As used in 15-30-171 through 15-30-179, the following definitions apply:
(1) "Claim period" means the tax year for individuals required to file Montana individual income tax returns and the calendar year for individuals not required to file returns.
(2) "Claimant" means a person who is eligible to file a claim under 15-30-172.
(3) "Department" means the department of revenue.
(4) "Gross household income" means all income received by all individuals of a household while they are members of the household, excluding the gross amount of any pension or annuity, Railroad Retirement Act benefits, and all payments received under federal social security.
(5) "Gross rent" means the total rent in cash or its equivalent actually paid during the claim period by the renter or lessee for the right of occupancy of the homestead pursuant to an arm's-length transaction with the landlord.
(6) "Homestead" means:
(a) a single-family dwelling or unit of a multiple-unit dwelling that is subject to property taxes in Montana and as much of the surrounding land, but not in excess of 1 acre, as is reasonably necessary for its use as a dwelling; or
(b) a single-family dwelling or unit of a multiple-unit dwelling that is rented from a county or municipal housing authority as provided in Title 7, chapter 15.
(7) "Household" means an association of persons who live in the same dwelling, sharing its furnishings, facilities, accommodations, and expenses. The term does not include bona fide lessees, tenants, or roomers and boarders on contract.
(8) "Household income" means the amount obtained by subtracting $6,300 from gross household income.
(9) (a) "Income" means, except as provided in subsection (9)(b), federal adjusted gross income, without regard to loss, as that quantity is defined in the Internal Revenue Code of the United States, plus all nontaxable income, including but not limited to:
(i) the amount of any pension or annuity, including Railroad Retirement Act benefits and veterans' disability benefits;
(ii) the amount of capital gains excluded from adjusted gross income;
(iii) alimony;
(iv) support money;
(v) nontaxable strike benefits;
(vi) cash public assistance and relief; and
(vii) interest on federal, state, county, and municipal bonds; and.
(viii) all payments received under federal social security except social security income paid directly to a nursing home.
(b) For the purposes of this subsection (9),:
(i) income is reduced by the taxpayer's basis; and
(ii) income does not include the gross amount of any pension or annuity, including Railroad Retirement Act benefits and all payments received under federal social security.
(10) "Property tax billed" means taxes levied against the homestead, including special assessments and fees but excluding penalties or interest during the claim period.
(11) "Rent-equivalent tax paid" means 15% of the gross rent."
Section 3. Section 15-30-176, MCA, is amended to read:
"15-30-176. Residential property tax credit for elderly -- computation of relief. The amount of the tax credit granted under the provisions of 15-30-171 through 15-30-179 is computed as follows:
(1) In the case of a claimant who owns the homestead for which a claim is made, the credit is the amount of property tax billed less the deduction specified in subsection (4).
(2) In the case of a claimant who rents the homestead for which a claim is made, the credit is the amount of rent-equivalent tax paid less the deduction specified in subsection (4).
(3) In the case of a claimant who both owns and rents the homestead for which a claim is made, the credit is:
(a) the amount of property tax billed on the owned portion of the homestead less the deduction specified in subsection (4); plus
(b) the amount of rent-equivalent tax paid on the rented portion of the homestead less the deduction specified in subsection (4).
(4) Property tax billed and rent-equivalent tax paid are reduced according to the following schedule:
Household income Amount of reduction
$ 0-999 $0
1,000-1,999 $0
2,000-2,999 the product of .006 .009 times the household income
3,000-3,999 the product of .016 .024 times the household income
4,000-4,999 the product of .024 .036 times the household income
5,000-5,999 the product of .028 .042 times the household income
6,000-6,999 the product of .032 .048 times the household income
7,000-7,999 the product of .035 .052 times the household income
8,000-8,999 the product of .039 .058 times the household income
9,000-9,999 the product of .042 .063 times the household income
10,000-10,999 the product of .045 .067 times the household income
11,000-11,999 the product of .048 .072 times the household income
12,000 & over the product of .050 .075 times the household income
(5) For a claimant whose household income is $35,000 or more but less than $45,000, the amount of the credit is equal to the credit calculated under this section multiplied by the decimal equivalent of a percentage figure according to the following table:
Gross household income Percentage of credit allowed
$35,000-37,500 40%
37,501-40,000 30%
40,001-42,500 20%
42,501-44,999 10%
45,000 or more 0%
(6) The credit granted may not exceed $1,000 $1,500."
NEW SECTION. Section 4. Effective dates. (1) [Sections 2, 3, and 5 and this section] are effective on passage and approval.
(2) [Section 1] is effective October 1, 2000.
NEW SECTION. Section 5. Applicability. (1) [Sections 2 and 3] apply retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 1999.
(2) [Section 1] applies to property tax years beginning after December 31, 2000.
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