PRINCIPAL RESIDENCE EXEMPTIONS:

BED & BREAKFASTS

House Bill 6030 (Substitute H-1)

Sponsor:  Rep. Howard Walker

Committee:  Tax Policy

Complete to 11-28-06                                                                            

A SUMMARY OF HOUSE BILL 6030 (SUBSTITUTE H-1)

The bill would amend the General Property Tax Act to specify that the principal residence exemption for property used as a bed and breakfast would be apportioned, generally speaking, based on the amount of property used (1) as a principal residence, (2) as a common area, and (3) regularly and exclusively as a bed and breakfast. 

If the property is open and available regularly and exclusively as a bed and breakfast for at least 90 consecutive days, the portion used as a principal residence would be,

·                    A is the square footage of property used exclusively as the principal residence.

·                    B is half of the square footage of common areas.

·                    C is the total square footage of the property. 

However, if the property is not open and available regularly and exclusively as a bed and breakfast for at least 90 consecutive days, the portion used as a principal residence would be calculated according to the following formula,

·                    A is the square footage of the property used exclusively as a principal residence.

·                    B is half of the square footage of the common areas.

·                    C is the square footage of the property used exclusively as a bed and breakfast.

·                    D is the total square footage of the property.

Common areas would include, but would not be limited to, a kitchen, dining room, living room, fitness room, porch, hallway, laundry room, bathroom, or other area used to provide a service to guests. 

FISCAL IMPACT:

Because the number of taxpayers that will take advantage of this provision, the taxable values of their homesteads, and the percentages to be exempted are not known, a precise estimate is not possible.

 

The bill would have no direct impact on state revenues; the reduction would be entirely at the local level and would reduce funding for schools. The School Aid Fund would then have to offset this loss through the foundation allowance.

                                                                                           Legislative Analyst:   Mark Wolf

                                                                                                  Fiscal Analyst:   Jim Stansell

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.