Excluding internal revenue code section 1031 exchange, build-to-suit and sale-leaseback arrangement transactions as indicators of fair market value for property tax valuation purposes.
Impact
If enacted, SB311 would directly alter the criteria used for property valuation under Kansas law by amending K.S.A. 79-503a. It will establish that federal 1031 exchange transactions should not be utilized as comparable sales or valid sales when determining fair market value, thereby ensuring that property taxation reflects actual market dynamics rather than tax-advantaged scenarios. This change could lead to more stable and consistent property tax assessments across Kansas, affecting both commercial and residential property owners.
Summary
Senate Bill 311 aims to amend the property taxation framework in Kansas by specifically excluding transactions related to the Internal Revenue Code Section 1031 exchange from being considered indicators of fair market value. With this change, the bill seeks to clarify how property value assessments are conducted for taxation purposes, ensuring that such exchange transactions do not influence the perceived fair market value of properties during valuation processes. This aims to promote a more accurate reflection of true market conditions rather than valuations skewed by tax-related transactions.
Contention
The primary points of contention surrounding SB311 revolve around stakeholders who might be adversely affected by the exclusion of 1031 exchanges from valuation considerations. Real estate professionals and property investors may argue that this change could potentially lower property values for certain transactions and thus impact their overall financial stability. Additionally, there may be concerns that the removal of these exchanges as valid sales could hamper investment activity in the real estate market, leading to fewer transactions and potentially affecting the broader economy.
Establishing the veterans' valor property tax relief act providing for an income tax credit or refund for eligible individuals, modifying the definition of household income and increasing the appraised value threshold for eligibility of seniors and disabled veterans related to increased property tax claims and citing the section as the homeowners' property tax freeze program, providing property tax exemptions for certain personal property including watercraft, marine equipment, off-road vehicles, motorized bicycles and certain trailers, excluding internal revenue code section 1031 exchange transactions as indicators of fair market value, providing for certain exclusions from the prohibition of paying taxes under protest after a valuation notice appeal and providing four prior years' values on the annual valuation notice.
Modifying income tax rates for individuals, exempting all social security benefits from Kansas income tax, increasing the Kansas standard deduction and the Kansas personal exemption, increasing the income tax credit amount for household and dependent care expenses, decreasing the privilege tax normal tax, excluding internal revenue code section 1031 exchange transactions as indicators of fair market value for property tax valuation purposes, increasing the extent of property tax exemption for residential property from the statewide school levy, providing for certain transfers to the state school district finance fund and abolishing the local ad valorem tax reduction fund and the county and city revenue sharing fund.
Providing that leased ground owned by a county-recognized community land trust shall be considered as a factor in determining fair market value for property tax purposes.
Excluding buyer's premiums from the sale price of property purchased at auction for real estate sales validation questionnaire and property tax valuation purposes.
Proposing to amend section 1 of article 11 of the constitution of the state of Kansas to establish the taxable valuation of real property used for residential purposes based on the sales price for the year in which the property transferred ownership if the transfer was sold at fair market value or valued pursuant to law as fair market value in the year in which the transfer occurred for the current owner.
Establishing the property tax use value for residential real property, real property used for commercial and industrial purposes and mobile homes used for residential purposes.