South Carolina General Assembly

116th Session, 2005-2006

H. 3453

STATUS INFORMATION

General Bill

Sponsors: Reps. Limehouse, Altman, Barfield, Bailey, Rice, Scarborough, Wilkins, Owens, Clemmons, Hagood and Mahaffey

Document Path: l:\council\bills\ggs\22904htc05.doc

Companion/Similar bill(s): 366, 3919

Introduced in the House on February 3, 2005

Introduced in the Senate on April 28, 2005

Last Amended on April 26, 2005

Currently residing in the Senate Committee on Finance

Summary: Provisions for property tax cap/exemption for watercraft

HISTORY OF LEGISLATIVE ACTIONS

DateBodyAction Description with journal page number

2/3/2005HouseIntroduced and read first time HJ12

2/3/2005HouseReferred to Committee on Ways and MeansHJ13

2/15/2005HouseMember(s) request name added as sponsor: Altman

2/16/2005HouseMember(s) request name added as sponsor: Barfield

3/2/2005HouseMember(s) request name added as sponsor: Bailey, Rice

3/3/2005HouseMember(s) request name added as sponsor: Scarborough

3/8/2005HouseMember(s) request name added as sponsor: Wilkins

3/9/2005HouseMember(s) request name added as sponsor: Owens

3/16/2005HouseMember(s) request name added as sponsor: Clemmons

4/19/2005HouseMember(s) request name added as sponsor: Hagood

4/19/2005HouseCommittee report: Favorable with amendment Ways and MeansHJ52

4/20/2005HouseMember(s) request name added as sponsor: Mahaffey

4/26/2005HouseDebate interrupted HJ66

4/26/2005HouseAmended HJ74

4/26/2005HouseRead second time HJ82

4/26/2005HouseRoll call Yeas67 Nays34 HJ82

4/27/2005HouseRead third time and sent to Senate HJ18

4/28/2005SenateIntroduced and read first time SJ10

4/28/2005SenateReferred to Committee on FinanceSJ10

5/17/2005SenateCommittee report: Favorable with amendment FinanceSJ12

5/18/2005Scrivener's error corrected

1/10/2006SenateRetaining place on calendar recommitted to Committee on FinanceSJ52

VERSIONS OF THIS BILL

2/3/2005

4/19/2005

4/26/2005

5/17/2005

5/18/2005

Indicates Matter Stricken

Indicates New Matter

COMMITTEE REPORT

May 17, 2005

H.3453

Introduced by Reps. Limehouse, Altman, Barfield, Bailey, Rice, Scarborough, Wilkins, Owens, Clemmons, Hagood and Mahaffey

S. Printed 5/17/05--S.[SEC 5/18/05 3:56 PM]

Read the first time April 28, 2005.

THE COMMITTEE ON FINANCE

To whom was referred a Bill (H.3453) to amend Section 1237224, Code of Laws of South Carolina, 1976, relating to the classification of a motor home as real property for purposes of, etc., respectfully

REPORT:

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:

/SECTION1.Section 1237224 of the 1976 Code, as added by Act 114 of 1999, is amended to read:

“Section 1237224.A motor home and a trailer used for camping and recreational travel that is pulled by a motor vehicle 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. By ordinance, the governing body of a county may extend the provisions of this section to a boat that meets the same qualifications required for motor homes and trailers pursuant to this section.”

SECTION2.Article 5, Chapter 37, Title 12 of the 1976 Code is amended by adding:

“Section 1237712.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 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 sixtyfive days. A boat used in interstate commerce must be physically present in this State for 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 currently taxed in this State 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.”

SECTION3.This act takes effect upon approval by the Governor and applies for property tax years beginning after 2005. //

Renumber sections to conform.

Amend title to conform.

HUGH K. LEATHERMAN, SR. for Committee.

STATEMENT OF ESTIMATED FISCAL IMPACT

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 and trailers by $7,750,000 in FY 2006 and shifting this amount among and within the other classes of property.

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 $2,830,000 and shifts this amount among the other classes of property. This bill also caps the total taxes levied on any boat at $1,500. We estimate that the $1,500 maximum ad valorem tax cap on boats will increase the revenue shift by $2,720,000, bringing the total shift to $5,550,000 in FY 2006.

House Amendment

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. This bill as amended adds trailers used for camping and recreational travel that are pulled by a motor vehicle to this definition. This effectively changes the assessment ratio on these trailers from 10.5% to 6.0%, reduces the amount of revenue collected on these trailers by $2.2 million and shifts this amount among and within the other classes of property. In total, this bill would change the incidence of local property taxes by reducing the property taxes collected from these boats and trailers by $7,750,000 in FY 2006 and shifting this amount among and within the 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 by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.

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A BILL

TO AMEND SECTION 1237224, 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 AMEND SECTION 1237220, AS AMENDED, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO EXEMPT A SUFFICIENT AMOUNT OF THE FAIR MARKET VALUE OF A WATERCRAFT AND OF THE COMBINED VALUE OF A WATERCRAFT AND ITS MOTOR, IF TAXED SEPARATELY, TO LIMIT TO ONE THOUSAND FIVE HUNDRED DOLLARS THE PROPERTY TAX DUE ON THE WATERCRAFT OR BOTH THE WATERCRAFT AND THE MOTOR, FOR ONE PROPERTYTAX YEAR.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION1.Section 1237224 of the 1976 Code, as added by Act 114 of 1999, is amended to read:

“Section 1237224.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.”

SECTION2.Section 1237220(B)(38) of the 1976 Code is amended to read:

“(38)(a)Watercraft and motors whichthat have an assessment of not more than fifty dollars.

(b)an amount of the fair market value of any watercraft, including those assessed pursuant to Section 1237224, sufficient to limit to one thousand five hundred dollars the total property tax on the watercraft for a propertytax year.”

SECTION3. A. Section 1237224 of the 1976 Code is amended to read:

“Section 1237224.A motor home, or trailer used for camping and recreational travel that is pulled by a motor vehicle, 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. This SECTION takes effect upon approval by the Governor and is applicable for travel trailer property tax years beginning after 2005.

SECTION4. This act takes effect upon approval by the Governor and applies for property tax years beginning after 2004.

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