23.1062.02000
Sixty-eighth
Legislative Assembly SENATE BILL NO. 2387
of North Dakota
Introduced by
Senator Luick
1 A BILL for an Act to create and enact two new sections to chapter 57-02 and a new section to
2 chapter 57-15 of the North Dakota Century Code, relating to limitations on true and full valuation
3 of primary residences and agricultural property and limitations on the effective tax rate on a
4 primary residence; to amend and reenact subsection 15 of section 57-02-08, sections
5 57-02-08.1, 57-02-14, 57-15-31.1, and 57-15-34, and subsection 2 of section 57-55-10 of the
6 North Dakota Century Code, relating to limitations on the effective tax rate on a primary
7 residence and removal of the farm residence property tax exemption; and to provide an
8 effective date.
9 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
10 SECTION 1. A new section to chapter 57-02 of the North Dakota Century Code is created
11 and enacted as follows:
12 Limitations on true and full valuation on a primary residence.
13 1. For purposes of this section:
14 a. "Consumer price index" means the percentage change in the consumer price
15 index for all urban consumers in the midwest region as determined by the United
16 States department of labor, bureau of labor statistics, for the most recent year
17 ending December thirty-first.
18 b. "Improvement" means any structural change to a parcel of taxable property used
19 as a primary residence made after the most recent assessment of the property
20 which increases the true and full value of the property. The term does not include:
21 (1) Ordinary maintenance of an existing structure or the grounds of the
22 property.
23 (2) A replacement structure for a structure rendered uninhabitable or unusable
24 by a casualty or by wind or water damage, unless:
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1 (a) The square footage of the replacement structure exceeds that of the
2 replaced structure as that structure existed before the casualty or
3 damage occurred; or
4 (b) The exterior of the replacement structure is of higher quality
5 construction and composition than that of the replaced structure.
6 c. "Primary residence" means a dwelling in this state owned and occupied by an
7 individual as that individual's primary residence as of the assessment date of the
8 taxable year. The term includes a farm residence. The term does not include
9 commercial property or property used for investment purposes.
10 2. Notwithstanding any other provision of law, for purposes of taxation, the true and full
11 valuation of a parcel of taxable property used as a primary residence must be limited
12 as provided in this subsection.
13 a. The true and full valuation on a parcel of taxable property used as a primary
14 residence may not exceed the base value as provided in this subsection. To
15 determine the current base value of the property, the assessor shall:
16 (1) For taxable year 2024, calculate the initial base value of the property as an
17 amount equal to the true and full valuation assessed against the property in
18 the 2019 taxable year.
19 (2) For taxable years after 2024, increase the base value calculated for the
20 previous taxable year by two percent, or the consumer price index,
21 whichever is less.
22 (3) Adjust the base value, including any increase in paragraph 2, for any of the
23 following:
24 (a) A sale, transfer, or other change in ownership of the parcel of taxable
25 property used as a primary residence as provided in subdivision b;
26 (b) An improvement made to the parcel of taxable property used as a
27 primary residence as provided in subdivision c; and
28 (c) A decrease in true and full value of the parcel of taxable property used
29 as a primary residence as provided in subdivision d.
30 (4) Reduce the base value calculated pursuant to paragraphs 1 through 3 by
31 fifty thousand dollars.
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1 b. Upon sale, transfer, or other change in ownership of the parcel of taxable
2 property used as a primary residence, the assessor shall reassess the property
3 to reflect the current true and full value of the property as of the date of the sale,
4 transfer, or change in ownership.
5 c. If an owner of a parcel of taxable property used as a primary residence makes or
6 causes to be made an improvement to the property, the assessor shall:
7 (1) For an improvement that is an addition to the property and does not render
8 the property new or substantially equivalent to new, determine the true and
9 full value of the improvement and adjust the base value to include the
10 previous base value, plus an additional amount to account for improvements
11 made to the property.
12 (2) For an improvement that renders the property new or substantially
13 equivalent to new, reassess the property to reflect the current true and full
14 value of the property as of the date of construction completion, accounting
15 for improvements made to the property. The base value must be adjusted to
16 reflect the reassessed value.
17 (3) For an improvement that does not make a change to the land on which the
18 primary residence is situated, leave the base year value of the land
19 unchanged.
20 d. If the most recently assessed true and full value of a parcel of taxable property
21 used as a primary residence is less than the current base value of the taxable
22 property, the assessor shall adjust the base value of the property to reflect the
23 lower true and full value.
24 e. Notwithstanding any other provision of this section, the base year value of the
25 parcel of taxable property used as a primary residence that is rendered
26 uninhabitable or unusable by a casualty or by wind or water damage may be
27 transferred to a comparable property within the same county which is acquired or
28 newly constructed as a replacement for the uninhabitable or unusable property.
29 3. A city or county may not supersede or modify the application of this section under
30 home rule authority.
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1 SECTION 2. A new section to chapter 57-02 of the North Dakota Century Code is created
2 and enacted as follows:
3 Limitation on agricultural property assessment increases.
4 1. Notwithstanding any other provision of law, for purposes of taxation, the true and full
5 valuation of a parcel of taxable agricultural property must be limited as provided in this
6 subsection.
7 a. The true and full valuation on a parcel of taxable agricultural property may not
8 exceed the base value as provided in this subsection. To determine the current
9 base value of the property, the assessor shall:
10 (1) For taxable year 2024, calculate the initial base value of the property as an
11 amount equal to the true and full valuation assessed against the property in
12 the 2019 taxable year.
13 (2) For taxable years after 2024, increase the base value calculated for the
14 previous taxable year by two percent, or the consumer price index,
15 whichever is less. For purposes of this paragraph, "consumer price index"
16 means the percentage change in the consumer price index for all urban
17 consumers in the midwest region as determined by the United States
18 department of labor, bureau of labor statistics, for the most recent year
19 ending December thirty-first.
20 (3) Adjust the base value, including any increase in paragraph 2, for any of the
21 following:
22 (a) A sale, transfer, or other change in ownership of the parcel of taxable
23 agricultural property as provided in subdivision b; and
24 (b) A decrease in true and full value of the parcel of taxable agricultural
25 property as provided in subdivision c.
26 b. Upon sale, transfer, or other change in ownership of the parcel of taxable
27 agricultural property, the assessor shall reassess the property to reflect the
28 current true and full value of the property as of the date of the sale, transfer, or
29 change in ownership.
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1 c. If the most recently assessed true and full value of a parcel of taxable agricultural
2 property is less than the current base value of the taxable property, the assessor
3 shall adjust the base value of the property to reflect the lower true and full value.
4 2. A city or county may not supersede or modify the application of this section under
5 home rule authority.
6 SECTION 3. AMENDMENT. Subsection 15 of section 57-02-08 of the North Dakota
7 Century Code is amended and reenacted as follows:
8 15. a. All farm structures and improvements located on agricultural lands.
9 (1)a. This subsection must be construed to exempt farm buildings and improvements
10 only, and may not be construed to exempt from taxation farm residences,
11 structures used to provide housing for a farm employee, industrial plants, or
12 structures of any kind not used or intended for use as a part of a farm plant, or as
13 a farm residence.
14 (2)b. "Farm buildings and improvements" includes a greenhouse or other building used
15 primarily for the growing of horticultural or nursery products from seed, cuttings,
16 or roots, if not used on more than an occasional basis for a showroom for the
17 retail sale of horticultural or nursery products. A greenhouse or building used
18 primarily for display and sale of grown horticultural or nursery products is not a
19 farm building or improvement.
20 (3)c. Any structure or improvement used primarily in connection with a retail or
21 wholesale business other than farming, any structure or improvement located on
22 platted land within the corporate limits of a city, any structure or improvement
23 used by a manufacturing facility as defined in section 19-24.1-01, or any structure
24 or improvement located on railroad operating property subject to assessment
25 under chapter 57-05 is not exempt under this subsection. For purposes of this
26 paragraphsubdivision, "business other than farming" includes processing to
27 produce a value-added physical or chemical change in an agricultural commodity
28 beyond the ordinary handling of that commodity by a farmer prior to sale.
29 (4)d. The following factors may not be considered in application of the exemption
30 under this subsection:
31 (a)(1) Whether the farmer grows or purchases feed for animals raised on the farm.
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1 (b)(2) Whether animals being raised on the farm are owned by the farmer.
2 (c)(3) Whether the farm's replacement animals are produced on the farm.
3 (d)(4) Whether the farmer is engaged in contract feeding of animals on the farm.
4 b. It is the intent of the legislative assembly that this exemption as applied to a
5 residence must be strictly construed and interpreted to exempt only a residence
6 that is situated on a farm and which is occupied or used by a person who is a
7 farmer and that the exemption may not be applied to property which is occupied
8 or used by a person who is not a farmer. For purposes of this subdivision:
9 (1) "Farm" means a single tract or contiguous tracts of agricultural land
10 containing a minimum of ten acres [4.05 hectares] and for which the farmer,
11 actually farming the land or engaged in the raising of livestock or other
12 similar operations normally associated with farming and ranching, has
13 annual gross income from farming activities which is sixty-six percent or
14 more of annual gross income, including gross income of a spouse if
15 married, during any of the two preceding calendar years.
16 (2) "Farmer" means an individual who normally devotes the major portion of
17 time to the activities of producing products of the soil, with the exception of
18 marijuana grown under chapter 19-24.1; poultry; livestock; or dairy farming
19 in such products' unmanufactured state and has received annual gross
20 income from farming activities which is sixty-six percent or more of annual
21 gross income, including gross income of a spouse if married, during any of
22 the two preceding calendar years. For purposes of this paragraph, "farmer"
23 includes a:
24 (a) "Beginning farmer", which means an individual who has begun
25 occupancy and operation of a farm within the two preceding calendar
26 years; who normally devotes the major portion of time to the activities
27 of producing products of the soil, poultry, livestock, or dairy farming in
28 such products' unmanufactured state; and who does not have a
29 history of farm income from farm operation for each of the two
30 preceding calendar years.
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1 (b) "Retired farmer", which means an individual who is retired because of
2 illness or age and who at the time of retirement owned and occupied
3 as a farmer the residence in which the person lives and for which the
4 exemption is claimed.
5 (c) "Surviving spouse of a farmer", which means the surviving spouse of
6 an individual who is deceased, who at the time of death owned and
7 occupied as a farmer the residence in which the surviving spouse
8 lives and for which the exemption is claimed. The exemption under
9 this subparagraph expires at the end of the fifth taxable year after the
10 taxable year of death of an individual who at the time of death was an
11 active farmer. The exemption under this subparagraph applies for as
12 long as the residence is continuously occupied by the surviving
13 spouse of an individual who at the time of death was a retired farmer.
14 (3) "Gross income" means gross income as defined under the federal Internal
15 Revenue Code and does not include a gain from the sale or exchange of
16 farm machinery as computed for federal income tax purposes. For purposes
17 of this paragraph, "farm machinery" means all vehicular implements and
18 attachment units designed and sold for direct use in planting, cultivating, or
19 harvesting farm products or used in connection with the production of
20 agricultural produce or products, livestock, or poultry on farms, which are
21 operated, drawn, or propelled by motor or animal power. "Farm machinery"
22 does not include vehicular implements operated wholly by hand or a motor
23 vehicle that is re