Tax relief after a tornado

When a 2006 tornado wiped out several homes in her area, Rep. Laura Brod (R-New Prague) said the last thing homeowners needed after the rebuilding process was a property tax hike.

But when a home built in the 1910s is completely destroyed by a natural disaster, the market value of a new home can dramatically increase, even if it’s the same size as the old one.

“What we’re trying to do is not to have those homeowners feel the shock of those increased taxes right away,” Brod said.

Brod proposed HF2412 to the House Property Tax Relief and Local Sales Tax Division March 7. The bill would allow homeowners to pay taxes on the value of their old home, with the tax increase on the new home phased-in over a three-year period.

Limiting a home’s market value can be frustrating for assessors, Brod said, but she’d be willing to work on the bill.

The bill was laid over for possible inclusion in the division’s omnibus bill.

“I really like this bill,” said Division Chairman Rep. Paul Marquart (DFL-Dilworth), who added he is normally opposed to limited-market value.

“I do think that you’re at least keeping this person from getting a double-whammy,” he said. “They’ve suffered the damage of their home and now they fix it up and it’s really not necessarily an improvement, it’s just a newer home … and now they’re going to get hit with higher property taxes after this disaster.”

Currently homeowners in disaster areas declared by the president are subject to some protections, but homeowners hit by local disasters, like tornadoes or floods, are not eligible for any property tax relief. The bill would apply to homes where a local emergency has been declared.

To be eligible, homes would have to sustain more than $5,000 in damage and have an increased market value after reconstruction.

There is no Senate companion.