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A vote for would
Extend eligibility for certain special property tax treatments to property held in trust.
The Louisiana Constitution has several special property tax treatments for various groups. All homeowners receive a homestead exemption on their primary residence. The exemption basically means the first $75,000 of value of the home is not included as part of the primary local property tax. Property tax assessments are frozen, and therefore will not increase, for homestead owners who are: over the age of 65; disabled veterans; surviving spouses of members of the military who were killed in action; or the totally disabled. Disabled veterans or their surviving spouses receive an additional $75,000 property tax exemption. Also, a 100% property tax exemption is available for homeowners who are the surviving spouse of a member of the military, state police, local law enforcement or a firefighter who died in the line of duty.
Occasionally for succession planning purposes, owners may put their home into a trust. The trust allows the former owners to use the home, but otherwise transfer ownership. For example, grandparents may wish to place their home in trust for their grandchildren. Property placed in such a trust is explicitly eligible for the standard homestead exemption. However, a 2017 Attorney General’s opinion questions whether all of the other special exemptions apply to property held in trust. This constitutional amendment would allow those other exemptions to apply to the trusts. The exemptions would no longer apply after the death of the original owners who set up the trust.
Companion legislation specifies that trusts would be eligible for special tax treatment if certain conditions are met. These conditions include that the person who establishes the trust must live in the property and, but for the creation of the trust, they would have been eligible for the exemption.
Louisiana voters have made it clear that they want groups such as the disabled and the elderly to receive special tax treatment. These exemptions should apply to property in trust, just like the homestead exemption already does. There is no good policy reason to discriminate against those trying to provide for a smooth succession for their family.
While the various property tax exemptions help worthy groups, it begs the question of when does the state draw the line for property tax exemptions. Although this expansion of these exemptions to trusts is a relatively minor loss of revenue from the local government standpoint, the combination of this and other special homestead exemptions has a cumulative impact on the local tax base.
Legal Citation: Act 721 (Senate Bill 163 by Sen. Perry) of the 2018 Regular Session to add Article VII, Section 18(G)(6), Section 21(K)(4) and (M)(4).
The Public Affairs Research Council of Louisiana (PAR) is an independent voice, offering solutions to public issues in Louisiana through accurate, objective research and focusing public attention on those solutions. PAR is a private, nonprofit research organization founded in 1950 and supported by membership contributions, foundation and corporate grants and special events.
For more information, media interviews or public presentation requests regarding this constitutional amendment guide, please contact PAR President Robert Travis Scott at RobertScott@parlouisiana.org.