Assembly Bill No. 433–Assemblyman Neighbors

 

March 19, 2001

____________

 

Referred to Committee on Taxation

 

SUMMARY—Makes various changes relating to property taxes. (BDR 32‑1140)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to taxation; providing guidelines for determining the amount of time a person leases or uses certain property for the purpose of determining the amount of tax to be levied on such lease or use; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1. Chapter 361 of NRS is hereby amended by adding thereto a

1-2  new section to read as follows:

1-3    1.  For purposes of NRS 361.157, 361.159 and 361.227, except as

1-4  otherwise provided in subsection 2, property is leased or used by a

1-5  natural person or entity at all times the natural person or entity has

1-6  possession of, claim to or right to the possession of the property that is

1-7  independent, durable and exclusive of rights held by others in the

1-8  property, other than the rights held by the owner.

1-9    2.  Property is not leased or used by a natural person or entity who

1-10  possesses or occupies the property solely for the purpose of holding the

1-11  property for another natural person or entity.

1-12    3.  As used in this section:

1-13    (a) “Durable” means for a determinable period with a reasonable

1-14  certainty that the use, possession or claim with respect to the property

1-15  will continue for that period.

1-16    (b) “Exclusive” means the enjoyment of a beneficial use of property,

1-17  together with the ability to exclude from occupancy persons or entities

1-18  other than the owner who may interfere with that enjoyment.

1-19    (c) “Independent” means the ability to exercise authority and exert

1-20  control over the management or operation of the property pursuant to the

1-21  terms and provisions of the contract with the owner. A possession or use

1-22  is independent if the possession or use of the property is sufficiently

2-1  autonomous under the terms and provisions of the contract with the

2-2  owner to constitute more than a mere agency.

2-3    Sec. 2.  NRS 361.157 is hereby amended to read as follows:

2-4    361.157  1.  When any real estate or portion of real estate which for

2-5  any reason is exempt from taxation is leased, loaned or otherwise made

2-6  available to and used by a natural person, association, partnership or

2-7  corporation in connection with a business conducted for profit or as a

2-8  residence, or both, the leasehold interest, possessory interest, beneficial

2-9  interest or beneficial use of the lessee or user of the property is subject to

2-10  taxation to the extent the:

2-11    (a) Portion of the property leased or used; and

2-12    (b) Percentage of time during the fiscal year that the property is leased

2-13  by the lessee or used by the user, in accordance with section 1 of
this act,

2-14  can be segregated and identified. The taxable value of the interest or use

2-15  must be determined in the manner provided in subsection 3 of NRS

2-16  361.227[.] and in accordance with section 1 of this act.

2-17    2.  Subsection 1 does not apply to:

2-18    (a) Property located upon a public airport, park, market or fairground ,

2-19  or any property owned by a public airport, unless the property owned by

2-20  the public airport is not located upon the public airport and the property is

2-21  leased, loaned or otherwise made available for purposes other than for the

2-22  purposes of a public airport, including, without limitation, residential,

2-23  commercial or industrial purposes;

2-24    (b) Federal property for which payments are made in lieu of taxes in

2-25  amounts equivalent to taxes which might otherwise be lawfully assessed;

2-26    (c) Property of any state-supported educational institution;

2-27    (d) Property leased or otherwise made available to and used by a natural

2-28  person, private association, private corporation, municipal corporation,

2-29  quasi-municipal corporation or a political subdivision under the provisions

2-30  of the Taylor Grazing Act or by the United States Forest Service or the

2-31  Bureau of Reclamation of the United States Department of the Interior;

2-32    (e) Property of any Indian or of any Indian tribe, band or community

2-33  which is held in trust by the United States or subject to a restriction against

2-34  alienation by the United States;

2-35    (f) Vending stand locations and facilities operated by blind persons

2-36  under the auspices of the bureau of services to the blind and visually

2-37  impaired of the rehabilitation division of the department of employment,

2-38  training and rehabilitation, whether or not the property is owned by the

2-39  federal, state or a local government;

2-40    (g) Leases held by a natural person, corporation, association, municipal

2-41  corporation, quasi-municipal corporation or political subdivision for

2-42  development of geothermal resources, but only for resources which have

2-43  not been put into commercial production;

2-44    (h) The use of exempt property that is leased, loaned or made available

2-45  to a public officer or employee, incident to or in the course of public

2-46  employment;

2-47    (i) A parsonage owned by a recognized religious society or corporation

2-48  when used exclusively as a parsonage;

3-1    (j) Property owned by a charitable or religious organization all , or a

3-2  portion of which , is made available to and is used as a residence by a

3-3  natural person in connection with carrying out the activities of the

3-4  organization;

3-5    (k) Property owned by a governmental entity and used to provide

3-6  shelter at a reduced rate to elderly persons or persons having low incomes;

3-7    (l) The occasional rental of meeting rooms or similar facilities for

3-8  periods of less than 30 consecutive days; or

3-9    (m) The use of exempt property to provide day care for children if the

3-10  day care is provided by a nonprofit organization.

3-11    3.  Taxes must be assessed to lessees or users of exempt real estate and

3-12  collected in the same manner as taxes assessed to owners of other real

3-13  estate, except that taxes due under this section do not become a lien against

3-14  the property. When due, the taxes constitute a debt due from the lessee or

3-15  user to the county for which the taxes were assessed and, if unpaid, are

3-16  recoverable by the county in the proper court of the county.

3-17    Sec. 3.  NRS 361.159 is hereby amended to read as follows:

3-18    361.159  1.  Except as otherwise provided in subsection 3, when

3-19  personal property, or a portion of personal property, which for any reason

3-20  is exempt from taxation is leased, loaned or otherwise made available to

3-21  and used by a natural person, association or corporation in connection with

3-22  a business conducted for profit, the leasehold interest, possessory interest,

3-23  beneficial interest or beneficial use of any such lessee or user of the

3-24  property is subject to taxation to the extent the:

3-25    (a) Portion of the property leased or used; and

3-26    (b) Percentage of time during the fiscal year that the property is leased

3-27  to the lessee or used by the user, in accordance with section 1 of
this act,

3-28  can be segregated and identified. The taxable value of the interest or use

3-29  must be determined in the manner provided in subsection 3 of NRS

3-30  361.227[.] and in accordance with section 1 of this act.

3-31    2.  Taxes must be assessed to lessees or users of exempt personal

3-32  property and collected in the same manner as taxes assessed to owners of

3-33  other personal property, except that taxes due under this section do not

3-34  become a lien against the personal property. When due, the taxes constitute

3-35  a debt due from the lessee or user to the county for which the taxes were

3-36  assessed and , if unpaid , are recoverable by the county in the proper court

3-37  of the county.

3-38    3.  The provisions of this section do not apply to personal property:

3-39    (a) Used in vending stands operated by blind persons under the auspices

3-40  of the bureau of services to the blind and visually impaired of the

3-41  rehabilitation division of the department of employment, training and

3-42  rehabilitation.

3-43    (b) Owned by a public airport.

3-44    Sec. 4.  NRS 361.227 is hereby amended to read as follows:

3-45    361.227  1.  Any person determining the taxable value of real property

3-46  shall appraise:

3-47    (a) The full cash value of:

4-1       (1) Vacant land by considering the uses to which it may lawfully be

4-2  put, any legal or physical restrictions upon those uses, the character of the

4-3  terrain, and the uses of other land in the vicinity.

4-4       (2) Improved land consistently with the use to which the

4-5  improvements are being put.

4-6    (b) Any improvements made on the land by subtracting from the cost of

4-7  replacement of the improvements all applicable depreciation and

4-8  obsolescence. Depreciation of an improvement made on real property must

4-9  be calculated at 1.5 percent of the cost of replacement for each year of

4-10  adjusted actual age of the improvement, up to a maximum of 50 years.

4-11    2.  The unit of appraisal must be a single parcel unless:

4-12    (a) The location of the improvements causes two or more parcels to

4-13  function as a single parcel;

4-14    (b) The parcel is one of a group of contiguous parcels which qualifies

4-15  for valuation as a subdivision pursuant to the regulations of the Nevada tax

4-16  commission; or

4-17    (c) In the professional judgment of the person determining the taxable

4-18  value, the parcel is one of a group of parcels which should be valued as a

4-19  collective unit.

4-20    3.  The taxable value of a leasehold interest, possessory interest,

4-21  beneficial interest or beneficial use for the purpose of NRS 361.157 or

4-22  361.159 must be determined in the same manner as the taxable value of the

4-23  property would otherwise be determined if the lessee or user of the

4-24  property was the owner of the property and it was not exempt from

4-25  taxation, except that the taxable value so determined must be reduced by a

4-26  percentage of the taxable value that is equal to the:

4-27    (a) Percentage of the property that is not actually leased by the lessee or

4-28  used by the user during the fiscal year; and

4-29    (b) Percentage of time that the property is not actually leased by the

4-30  lessee or used by the user during the fiscal year[.] , which must be

4-31  determined in accordance with section 1 of this act.

4-32    4.  The taxable value of other taxable personal property, except mobile

4-33  homes, must be determined by subtracting from the cost of replacement of

4-34  the property all applicable depreciation and obsolescence. Depreciation of

4-35  a billboard must be calculated at 1.5 percent of the cost of replacement for

4-36  each year after the year of acquisition of the billboard, up to a maximum of

4-37  50 years.

4-38    5.  The computed taxable value of any property must not exceed its full

4-39  cash value. Each person determining the taxable value of property shall

4-40  reduce it if necessary to comply with this requirement. A person

4-41  determining whether taxable value exceeds full cash value or whether

4-42  obsolescence is a factor in valuation may consider:

4-43    (a) Comparative sales, based on prices actually paid in market

4-44  transactions.

4-45    (b) A summation of the estimated full cash value of the land and

4-46  contributory value of the improvements.

4-47    (c) Capitalization of the fair economic income expectancy or fair

4-48  economic rent, or an analysis of the discounted cash flow.

5-1  A county assessor is required to make the reduction prescribed in this

5-2  subsection if the owner calls to his attention the facts warranting it, if he

5-3  discovers those facts during physical reappraisal of the property or if he is

5-4  otherwise aware of those facts.

5-5    6.  The Nevada tax commission shall , by regulation , establish:

5-6    (a) Standards for determining the cost of replacement of improvements

5-7  of various kinds.

5-8    (b) Standards for determining the cost of replacement of personal

5-9  property of various kinds. The standards must include a separate index of

5-10  factors for application to the acquisition cost of a billboard to determine its

5-11  replacement cost.

5-12    (c) Schedules of depreciation for personal property based on its

5-13  estimated life.

5-14    (d) Criteria for the valuation of two or more parcels as a subdivision.

5-15    7.  In determining the cost of replacement of personal property for the

5-16  purpose of computing taxable value, the cost of all improvements of the

5-17  personal property, including any additions to or renovations of the personal

5-18  property , but excluding routine maintenance and repairs, must be added to

5-19  the cost of acquisition of the personal property.

5-20    8.  The county assessor shall, upon the request of the owner, furnish

5-21  within 15 days to the owner a copy of the most recent appraisal of the

5-22  property.

5-23    9.  The provisions of this section do not apply to property which is

5-24  assessed pursuant to NRS 361.320.

5-25    Sec. 5.  This act becomes effective upon passage and approval.

 

5-26  H