Date Requested:February 17, 2012
Time Requested:02:56 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1292 Introduced SB629
CBD Subject: CLASS 2 RESIDENTIAL PROPERTY
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to permit a tax credit for improvements to Class II residential property. The bill limits the tax credit to $500 per year, provides for a carryover and ends in 2016. The bill also grants rule-making authority.
    
    As written, this bill permits taxpayers to take a tax credit against their Personal Income Tax liability in an amount equal to thirty percent of the cost of the improvement up to a maximum amount of $500. The provisions of this bill would reduce General Revenue collections by approximately $195 million per year during the period of FY 2013 to FY 2017.
    
    Assuming that all returns would be accepted as filed, additional administrative costs to the State Tax Department associated with this bill will be minimal.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -195,000,000 -195,000,000
3. Explanation of above estimates (including long-range effect):
    The stated purpose of this bill is to permit a tax credit for improvements to Class II residential property. The bill limits the tax credit to $500 per year, provides for a carryover and ends in 2016. The bill also grants rule-making authority.
    
    This bill allows a tax credit of up to $500 per year for any improvements made to Class II residential property occupied by the owners before July 1, 2016. Unused credit could be carried over to the following tax year until used. There are approximately 552,855 owner-occupied housing units within the State of West Virginia. The bill does not specify which improvements are qualified to be counted for the credit. Assuming that all of the owners of owner occupied housing units will be claiming the maximum allowable credit each year; passage of this bill would reduce General Revenue Fund collections by approximately $195 million per year during the period of FY 2013 to FY 2017.
    
    Assuming that all returns would be accepted as filed, additional administrative costs to the State Tax Department associated with this bill will be minimal.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to permit a tax credit for improvements to Class II residential property. The bill limits the tax credit to $500 per year, provides for a carryover and ends in 2016. The bill also grants rule-making authority.
    
    As written, this bill does not preclude a residential property owner from using the investment that would qualify for the proposed tax credit to also use the same investment to qualify for other existing tax credits such as the Residential Solar Energy Tax Credit and the vehicle refueling infrastructure portion of the Alternative Fuel Tax Credit.
    
    The bill fails to define the term “improvements,” and whether the credit may be taken for a single improvement project or the ‘improvements’ can be aggregated within any year. The bill also fails to specify if the five hundred dollar credit is a lifetime maximum or it is maximum allowable credit for any individual tax year.