Committee approves draft creating four property-tax classes; landlord certificates and mixed‑use rules central to administration

Legislative counsel Kirby Keaton presented standalone draft classification language (posted 04/03/2025) that would expand the state’s two existing classes (homestead and non‑homestead) to four classes and require that classifications be assigned prospectively based on current‑year use.

Under the draft, each parcel (or portion of a parcel) must be assigned one or more classifications and listers and assessors must update the grand list to include a tax classification no later than June 1 each year. Keaton explained the four categories:

- Homestead: parcels declared as homestead under existing homestead‑declaration procedures (declarations filed by April 15 and accepted through Oct. 15 under current law). - Non‑homestead apartment: parcels for which a landlord certificate has been filed and that the landlord attests will be leased to a long‑term tenant for a minimum of six months in the current year. Keaton said landlord certificates are filed on Jan. 15 and report tenants from the previous year; the draft would add an attestation about plans for the current year. - Non‑homestead residential: parcels with one or more dwelling units that are not homesteads and not covered by the landlord‑certificate/long‑term rental attestation (this category targets second homes and short‑term rentals). - Non‑homestead nonresidential: what remains of the current non‑homestead base after the other categories are removed.

The draft applies classifications prospectively and would handle mixed use proportionally by floor‑space percentages. Keaton said the bill would preserve the homestead rule that if 25% or less of floor space is used for business, the parcel remains a homestead. For portions used for multiple purposes, the ‘‘use in which the floor space is most often used shall be considered the primary use’’ and taxed accordingly.

Committee members focused on administration and compliance. Representative Higley and others raised concerns about the department’s capacity to verify landlord certificates and potential incentives for misreporting (for example, where a landlord could use a 30‑day tenant rule to avoid a non‑homestead residential classification). Keaton said the draft explicitly allows the Department of Taxes to publish and amend forms to capture the attestations needed for classification. Director, Joint Fiscal Office (asked by members for projected revenues) said revenue impacts cannot be projected until factors for each class are set and applied.

Several members framed the classification language as a necessary precursor to any future debate about differential rates. Representative Wolcomb and Representative Maslin said it is prudent to create identification and administrative systems first, then debate rate differentials later. Representative Wazowski and others argued the classification provisions are germane to the broader foundation bill because how money is distributed to schools depends on an accurate and equitable tax base.

The committee voted to approve the draft language to be incorporated into the foundation package. The transcript shows a roll-call result first reported as 6 in favor, 4 opposed, 0 abstentions; members agreed the draft would be posted and incorporated into the H.454 committee amendment for further consideration.

Why it matters: Creating classifications changes which parcels can be targeted by future rate choices and affects landlord and homeowner obligations for forms and attestations. The proposal relies on existing tools—homestead declarations and landlord certificates—but would require new attestations for current‑year intended use and would likely increase administrative work for the Department of Taxes.

What’s next: The draft classification language will be incorporated into the H.454 committee amendment; the department and counsel will refine forms and instructions for landlords and property owners before implementation (effective date in draft provisions referenced Jan. 1, 2027 for rate application alignment).