SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR
SENATE BILL 108
50th legislature - STATE OF NEW MEXICO - first session, 2011
AN ACT
RELATING TO TAXATION; EXTENDING THE THREE PERCENT LIMIT ON ANNUAL VALUATION INCREASES TO RESIDENTIAL PROPERTIES REGARDLESS OF WHETHER A CHANGE IN OWNERSHIP OCCURRED IN THE PRIOR TAX YEAR; PROVIDING FOR A REDUCTION IN RESIDENTIAL PROPERTY VALUE BEGINNING IN THE YEAR THE PROPERTY HAS A CHANGE OF OWNERSHIP OR IS VALUED AS NEW CONSTRUCTION; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-36-16 NMSA 1978 (being Laws 1973, Chapter 258, Section 18, as amended) is amended to read:
"7-36-16. RESPONSIBILITY OF COUNTY ASSESSORS TO DETERMINE AND MAINTAIN CURRENT AND CORRECT VALUES OF PROPERTY.--
A. County assessors shall annually determine values of property for property taxation purposes in accordance with the Property Tax Code and the regulations, orders, rulings and instructions of the department. Except as limited in Section 7-36-21.2 NMSA 1978, they shall also implement a program of updating property values so that current and correct values of property are maintained and shall have sole responsibility and authority at the county level for property valuation maintenance, subject only to the general supervisory powers of the director.
B. The director shall implement a program of regular evaluation of county assessors' valuation activities with particular emphasis on the maintenance of current and correct values.
C. Upon request of the county assessor, the director may contract with a board of county commissioners for the department to assume all or part of the responsibilities, functions and authority of a county assessor to establish or operate a property valuation maintenance program in the county. The contract shall be in writing and shall include provisions for the sharing of the program costs between the county and the department. The contract must include specific descriptions of the objectives to be reached and the tasks to be performed by the contracting parties. The initial term of any contract authorized under this subsection shall not extend beyond the end of the fiscal year following the fiscal year in which it is executed, but contracts may be renewed for additional one-year periods for succeeding years.
D. The department of finance and administration shall not approve the operating budget of any county in which there is not an adequate allocation of funds to the county assessor for the purpose of fulfilling [his] the county assessor's responsibilities for property valuation maintenance under this section. If the department of finance and administration questions the adequacy of any allocation of funds for this purpose, it shall consult with the department, the board of county commissioners and the county assessor in making its determination of adequacy.
E. To aid the board of county commissioners in determining whether a county assessor is operating an efficient program of property valuation maintenance and in determining the amount to be allocated to [him] the county assessor for this function, the county assessor shall present with [his] the county assessor's annual budget request a written report setting forth improvements of property added to valuation records during the year, additions of new property to valuation records during the year, increases and decreases of valuation during the year, the relationship of sales prices of property sold to values of the property for property taxation purposes and the current status of the overall property valuation maintenance program in the county. The county assessor shall send a copy of this report to the department."
SECTION 2. Section 7-36-21.2 NMSA 1978 (being Laws 2000, Chapter 10, Section 2, as amended) is amended to read:
"7-36-21.2. LIMITATION ON INCREASES IN VALUATION OF RESIDENTIAL PROPERTY.--
A. Except as required in this section, residential property shall be valued at its current and correct value in accordance with the provisions of the Property Tax Code; provided that for the [2001] 2011 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]. This limitation on increases in value does not apply to:
(1) a residential property in the first tax year that it is valued for property taxation purposes;
(2) any physical improvements, except for solar energy system installations, made to the property during the year immediately prior to the tax year or omitted in a prior tax year; or
(3) valuation of a residential property in any tax year in which
[(a) a change of ownership of the property occurred in the year immediately prior to the tax year for which the value of the property for property taxation purposes is being determined; or
(b)] the use or zoning of the property has changed in the year prior to the tax year.
[B. If a change of ownership of residential property occurred in the year immediately prior to the tax year for which the value of the property for property taxation purposes is being determined, the value of the property shall be its current and correct value as determined pursuant to the general valuation provisions of the Property Tax Code.]
B. Residential property in the first tax year that it is valued for property taxation purposes shall be valued by multiplying the sales price of the property by the presales assessment ratio generated for the tax year.
C. In 2011, all residential property that had a change of ownership in or after the 2004 tax year and before the 2011 tax year shall be valued at the value of the property in the year immediately preceding the year the change of ownership occurred and that value shall be increased by no more than three percent for each year following the transfer through the 2010 tax year; provided that the value of the property for the 2011 tax year shall not exceed its current and correct value.
D. In 2011, all residential property that had been valued as new construction in or after the 2004 tax year and before the 2011 tax year shall be valued by multiplying the sales price of the property in the first tax year that the new construction is valued for property taxation purposes by the presales assessment ratio for the tax year for the county in which the new construction is located and that value shall be increased by no more than the three percent for each year following the transfer through the 2010 tax year; provided that the value of the property for the 2011 tax year shall not exceed its current and correct value.
[C.] E. To assure that the values of residential property for property taxation purposes are at current and correct values in all counties prior to application of the limitation in Subsection A of this section, the department shall determine for the 2000 tax year the sales ratio pursuant to Section 7-36-18 NMSA 1978 or, if a sales ratio cannot be determined pursuant to that section, conduct a sales-ratio analysis using both independent appraisals by the department and sales. If 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 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. After such reassessment, the limitation on increases in valuation in this section shall apply in those counties in the earlier of the 2004 tax year or the first tax year following the tax year that the county has a sales ratio of eighty-five or higher, as measured by the median ratio of value for property taxation purposes to sales value or independent appraisal by the department. Thereafter, 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.
[D.] F. The provisions of this section do not apply to residential property for any tax year in which the property is subject to the valuation limitation in Section 7-36-21.3 NMSA 1978.
[E.] G. As used in this section:
(1) "change of ownership" means a transfer to a transferee by a transferor of all or any part of the transferor's legal or equitable ownership interest in residential property except for a transfer:
[(1)] (a) to a trustee for the beneficial use of the spouse of the transferor or the surviving spouse of a deceased transferor;
[(2)] (b) to the spouse of the transferor that takes effect upon the death of the transferor;
[(3)] (c) that creates, transfers or terminates, solely between spouses, any co-owner's interest;
[(4)] (d) to a child of the transferor, who occupies the property as that person's principal residence at the time of transfer; provided that the first subsequent tax year in which that person does not qualify for the head of household exemption on that property, a change of ownership shall be deemed to have occurred;
[(5)] (e) that confirms or corrects a previous transfer made by a document that was recorded in the real estate records of the county in which the real property is located;
[(6)] (f) for the purpose of quieting the title to real property or resolving a disputed location of a real property boundary;
[(7)] (g) to a revocable trust by the transferor with the transferor, the transferor's spouse or a child of the transferor as beneficiary; or
[(8)] (h) from a revocable trust described in [Paragraph (7)] Subparagraph (g) of this [subsection] paragraph back to the settlor or trustor or to the beneficiaries of the trust;
(2) "presales assessment ratio" means a ratio generated annually by the department for each county and found in the annual sales ratio study of the property tax division of the department derived by dividing current year property assessments by current and correct values generated from arm's length sales transactions; and
[F. As used in this section] (3) "solar energy system installation" means an installation that is used to provide space heat, hot water or electricity to the property in which it is installed and is:
[(1)] (a) an installation that uses solar panels that are not also windows;
[(2)] (b) a dark-colored water tank exposed to sunlight; or
[(3)] (c) a non-vented trombe wall."
SECTION 3. APPLICABILITY.--
A. The provisions of Section 1 of this act apply to property tax years beginning on or after January 1, 2011.
B. The provisions of this act apply to valuation of residential property for tax year 2011 or succeeding tax years.
SECTION 4. EFFECTIVE DATE.--The effective date of the provisions of Section 1 of this act is January 1, 2012.
SECTION 5. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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