Tax Code Chapter 312 Property Redevelopment And Tax Abatement Act

For purposes of this section “political subdivision” includes, but is not limited to a municipality, county, school district, special purpose district, or public service district. A county, municipality, special purpose or public service district, and a school district shall provide notice to the public by advertising the public hearing before the adoption of its budget for the next fiscal year in at least one South Carolina newspaper of general circulation in the area. This notice must be given not less than fifteen days in advance of the public hearing and must be a minimum of two columns wide with a bold headline. The Texas Department of Economic Development or its successor may recommend that a taxing unit enter into a tax abatement agreement with a person under this chapter. In determining whether to enter into a tax abatement agreement under this section, the governing body of a municipality shall consider any recommendation made by the Texas Department of Economic Development or its successor. “Taxing unit” has the meaning assigned by Section 1.04, except that for a tax abatement agreement executed on or after September 1, 2001, the term does not include a school district that is subject to Chapter 48, Education Code, and that is organized primarily to provide general elementary and secondary public education. The governing body of a taxing unit may not enter into a tax abatement agreement under this chapter unless it finds that the terms of the agreement and the property subject to the agreement meet the applicable guidelines and criteria adopted by the governing body under this section.

By reducing taxes on housing capital gains, TRA97 reduced the user cost in the housing market, which could have increased housing investment at the expense of non-housing investment. Second, the data set analyzed in this paper is a panel of houses instead of a panel of households. We need high quality longitudinal data on households to quantify how capital gains taxation before 1997 distorted homeowners’ mobility and housing consumption decisions and to understand the extent to which TRA97 corrected these distortions.

Excise Taxes

Using ZIP-code level housing price indexes and sales on single-family houses data from 1982 to 2006 in 16 affluent towns within the Boston metropolitan area, this paper finds that TRA97 reversed the lock-in effect of capital gains taxes on houses with low and moderate capital gains. However, TRA97 may have generated an unintended lock-in effect on houses with capital gains over the maximum exclusion amount. In addition, this paper exploits legislative changes in capital gains tax rate to estimate the tax elasticity of home sales during the post-TRA97 period. In this paper, I use housing transaction data to study the effect of capital gains taxation on home sales. More specifically, I construct a panel of single-family houses using the 1982–2008 sales records and ZIP code level house price indices in 16 affluent cities and towns within the Boston metropolitan area. The data set does not have information on individual characteristics such as age, income, and marital status, but it has accurate information on the dates and prices of home sales.

Hence, confounding factors such as single-family and multi-family properties behaving differently during housing cycles and the fraction of investment properties changing with housing market movements are unlikely to drive my results. As inherited assets are automatically revalued to their current or “stepped-up” basis, any capital gains are permanently exempted from taxation. Starting in 1998, a $400 tax credit for each child under age 17 was introduced, which was later increased to $500 in 1999. (Sec. 1529) Treats heart disease and hypertension as personal injuries or sickness for purposes of excluding from gross income the disability benefits received by former police officers or firefighters. (Sec. 1526) Sets forth special rules relating to the portability of permissive service credit under governmental plans.

Tax Relief Act Of 1997

The determination of the amount of the impact fee for the contracting governmental entity must be made in the same manner and is subject to the same procedures and limitations as provided in this article. (a-1) The commissioners court may execute a tax abatement agreement with the owner of a leasehold interest in tax-exempt real property located in a reinvestment zone designated under this subchapter to exempt all or a portion of the value of the leasehold interest in the real property.

“Development” means construction or installation of a new building or structure, or a change in use of a building or structure, any of which creates additional demand and need for public facilities. A building or structure shall include, but not be limited to, modular buildings and manufactured housing. “Capital improvements” means improvements with a useful life of five years or more, by new construction or other action, which increase or increased the service capacity of a public facility. “SECTION 3. Due to interruptions and delays in local government operations caused by the COVID-19 pandemic, any local government that has a comprehensive plan due December 31, 2020, may delay submission of the plan until December 31, 2021.” If the question is not approved at the initial referendum, the governing body may, by an ordinance meeting the requirements of this section, call for another referendum on the question.

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In this sample, the correlation between imputed prices and actual sales prices is 0.95 and the correlation between imputed prices and assessed values is 0.93. Because observations near the breakpoints are more likely to be misclassified, I place zero weights on observations with capital gains between −$5,000 and $5,000, between $118,750 and $131,250, between $237,500 and $262,500, and between $475,000 and $525,000. Column shows the estimation results after applying these weights and they are also very close to the main results.

Also, the simple model described above takes a rather “static” view of the roll-over rule. If a home seller purchases a more expense replacement home to take advantage of the roll-over rule in the pre-TRA97 regime, the model states that he owes zero tax liability. A more dynamic model should equate the homeowner’s tax liability to the expected present discounted value of future taxes on the deferred gains which depends on factors such as the homeowner’s discount rate and moving probability in subsequent years. The larger this present value of future taxes is, the less valuable the roll-over rule becomes, and the bigger impact TRA97 would generate. The act permanently exempted from taxation the capital gains on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This exemption applies to residences the taxpayer lived in for at least two years over the last five. The 1997 act exempted from taxation any capital gains on the sale of a personal residence up to $500,000 for married couples filing jointly and $250,000 for single individuals.

Taxpayer Relief Act Of 1997 Education Tax Credit

Home sales rates of houses in different capital gains categories also changed notably after 1997. In particular, the sales rates of houses with negative capital gains or capital gains above $500K declined considerably, while the sales rates of houses with capital gains between $0 and $500K changed little after TRA97. Notwithstanding another provision of this article, property for which a valid building permit or certificate of occupancy has been issued or construction has commenced before the effective date of a development impact fee ordinance is not subject to additional development impact fees. A governmental entity which adopts a development impact fee ordinance shall provide for mediation by a qualified independent party, upon voluntary agreement by both the fee payor and the governmental entity, to address a disagreement related to the impact fee for proposed development. Participation in mediation does not preclude the fee payor from pursuing other remedies provided for in this section or otherwise available by law. The local planning commission shall recommend to the governmental entity a capital improvements plan which may be adopted by the governmental entity by ordinance. The recommendations of the commission are not binding on the governmental entity, which may amend or alter the plan.

For example, the first column in the top panel uses 1991–95 observations and defines July 1, 1993 to be the cutoff date for a hypothetical regime change. Again, when the year 1997 falls outside the five-year window, the estimated coefficients are mostly small and insignificant. On the other hand, home sales rates of houses with positive capital gains increase the most when 1997 falls inside the five-year window.

The Effect Of Capital Gains Taxation On Home Sales: Evidence From The Taxpayer Relief Act Of 1997

Any special ordinance, formal agreement, or informal agreement entered into between a taxing jurisdiction and a taxpayer regarding rate classes, an annual flat fee, or the calculation of business license taxes that was adopted by ordinance or agreed to before enactment of this subsection is considered valid upon the approval of the taxpayer. A taxpayer may prove the existence and terms of an agreement through direct or circumstantial evidence, including evidence of prior payment accepted. Except as provided in subsection , the governing body of each county, municipality, school district, or special purpose district may not impose any fee or tax of any nature or description on the transfer of real property unless the General Assembly has expressly authorized by general law the imposition of the fee or tax. If the agreement was made before September 1, 1987, the terms regarding the share of the property to be exempt in each year of the agreement also apply to the taxation of the property by a county or school district. The capital gains measure used in this paper is constructed using the purchase price of the house and the ZIP code level house price indices. According to these indices, nominal single-family house prices in the sample ZIP codes increased on average by about 10 percent from 1994 to 1996, 24 percent from 1996 to 1998, and 32 percent from 1998 to 2000.

The potential simultaneity problem should be much less severe if I use the MSA level HPI to construct capital gains measures, although the measurement error problem may be exacerbated. The estimated coefficients on the key interaction terms are qualitatively similar to the main results. Suppose two houses were bought at the same time, but one was bought for $500,000 and the other $1,000,000. Even if the two houses follow exactly the same house price appreciation rates subsequently, their nominal capital gains at time t are likely to be very different. For example, if house prices double between the time of purchase and time t, the house that was bought for $500, 000 would have $500, 000 capital gains and the house that was bought for $1, 000, 000 would have twice as much capital gains. Suppose there are two identical houses next to each other with the same market price of $1,000,000. If one was bought twenty years ago and the other two years ago, the two houses are likely to have different capital gains.

Logict measures how large the parcel is. hict−1 is the real house price appreciation rate in the previous time period. Δc and θt are city fixed effects and time fixed effects, respectively.13 Because capital gains are imputed using ZIP code level house price indices, I cluster standard errors at the ZIP code level. Because house prices in the Boston metropolitan area did not appreciate significantly enough from 1987 to 1997 for me to observe many houses with large capital gains to be compared with the post-TRA97 period, I also obtain a data set of 1982–86 sales records. During this period of time, house prices in the studied area experienced steep increases. This second piece of sales data was compiled by a company that was later acquired by The Warren Group.

2016 Act No. 229, Section 2, added , relating to certain public education facilities. “Local planning commission” means the entity created pursuant to Article 1, Chapter 29, Title 6. “Level of service” means a measure of the relationship between service capacity and service demand for public facilities. “Land use assumptions” means tax act 1997 a description of the service area and projections of land uses, densities, intensities, and population in the service area over at least a ten-year period. “Incidental benefits” are benefits which accrue to a property as a secondary result or as a minor consequence of the provision of public facilities to another property.

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• (Sec. 964) Excepts an electing 1987 partnership which chooses to be subjected to a specified additional tax from the general rule that a publicly traded partnership be treated as a corporation.
• (Sec. 973) Increases, for purposes of computing the charitable deduction for the use of a passenger automobile, the standard mileage rate.
• A governmental entity which adopts a development impact fee ordinance shall provide for mediation by a qualified independent party, upon voluntary agreement by both the fee payor and the governmental entity, to address a disagreement related to the impact fee for proposed development.
• I am very grateful to Jim Poterba, Bill Wheaton and Jerry Hausman for advice and support.
• A political subdivision of this State may not enact any ordinance or policy that limits or prohibits a law enforcement officer, local official, or local government employee from communicating to appropriate federal or state officials with regard to the immigration status of any person within this State.
• Even when I attribute all house price appreciation between 1996 and 1998 to the capitalization effect of TRA97 and throw out the price changes in this period entirely, I still find estimates similar to the main results, suggesting that the capitalization mechanism plays a relatively small role in the estimated effect of TRA97.

The house price movements implied by this new set of indices are presumably exogenous to TRA97. I then use the simulated indices to impute capital gains and estimate the main specification. Even when I attribute all house price appreciation between 1996 and 1998 to the capitalization effect of TRA97 and throw out the price changes in this period entirely, I still find estimates similar to the main results, suggesting that the capitalization mechanism plays a relatively small role in the estimated effect of TRA97. Therefore, the estimated coefficients mostly represent the reversal of the lock-in effect of capital gains taxation. Lot size is time-invariant and captures the variation in home sales rate across different parcels. House price appreciation rates in the previous time period vary across ZIP codes and time. First, if homeowners form their expectations about future house price appreciation based on past house price movements, as suggested by Case and Shiller , then ht captures the variation in house price expectation across ZIP codes.

• This paper uses all three sources of variation to identify the effect of TRA97 on home sales.
• A property owner who files a copy of the certificate of completion for property for the first tax year covered by the agreement is not required to refile the certificate in a subsequent tax year to receive a tax abatement under this section for the property for that tax year.
• The act permanently exempted from taxation the capital gains on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles.
• (Sec. 1412) Permits records of exportation to be maintained by the exporter for purposes of cancelling or crediting bonds furnished when distilled spirits are removed from bonded premises.
• This fee may be in addition to all other fees and charges relating to a manufactured home or mobile home and may be required to be paid before electrical connection.
• Column shows the estimation results after adjusting for home improvement and addition costs.
• The magnitude of γ̂1 implies that a house on a 30,000 square-feet lot is 23% less likely to be sold than a house on a 9,000 square-feet lot .

The Revenue and Fiscal Affairs Office shall determine the content and format of the annual financial report. The financial report for the most recently completed fiscal year must be submitted to the Revenue and Fiscal Affairs Office by March fifteenth of each year.