Louisiana tax commissioners consider denying homestead exemption when homes produce rental income

At the Louisiana Tax Commission meeting on July 16, assessors and commission staff proposed new rules to treat residential properties that produce income — including short-term rentals — as ineligible for the homestead exemption for the year they produce income.

Richard, speaking for the Louisiana Assessors Association, said the association’s proposal would "establish a guideline that if the property has, produced income at any point of the year, then they are, not subject to a homestead exemption for that year." He and other assessors said owner‑occupied units that are partially rented (for example, one side of a duplex) would be allocated between exempt and nonexempt portions rather than automatically disqualifying the entire parcel.

At the same hearing, Tax Commission staff proposed new subclass codes and class definitions: Tanisha Malvo said staff would revise subclass 4,000 to define ‘‘single‑family residence’’ to exclude properties "predominantly used as a short term rental," and would create subclass 4,580 for short‑term rentals to include "any improvements typically considered residential property, but being used predominantly as a short term rental."

Commission Administrator Michael McEthern framed the policy question for the Commission: Louisiana’s Constitution sets three assessment levels — 10 percent for residential, 15 percent for other property and 25 percent for public service property — and staff wants guidance whether short‑term rentals should be taxed at the residential (10 percent) level or at the 15 percent rate used for lodging and other income properties. He said assessors could use the income approach under a 15 percent classification because those properties are being rented for income.

Assessors said they want clearer rules and more consistent forms. Richard and other assessors proposed adding contact and eligibility questions to the LAT forms (for example, whether the claimant is age 65 or a disabled veteran) and an email field to facilitate communication. Assessors also asked that the rules reference existing statutory deadlines and the secretary of state retention schedule rather than creating new record‑keeping mandates.

Commissioners pressed for specificity on some provisions. Commissioner Jeremy asked whether an assessor or the commission staff would determine when a change‑order request contains "sufficient reason" for an audit; assessors replied staff would review requests and could ask for targeted additional information. Commissioner Frazier asked how the commission will verify that property owners received notices; staff and assessors said existing statutes do not require certified delivery and that the proposed rules would not add a new proof‑of‑receipt requirement.

No final rule was adopted at the hearing. Chairman Russo said the Commission would take the proposals under advisement; a rebuttal hearing is scheduled for Aug. 20, 2025, and the Commission tentatively plans to consider adoption on Sept. 24, 2025.

The record shows assessors and staff seeking greater uniformity — from how assessors treat income‑producing residential property to modest changes in the personal‑property forms and clarifications on record retention. Commissioners asked for clearer drafting on allocation for partially rented properties and for explicit direction on who decides sufficiency of documentation when assessors submit change orders for review.