Property Tax Post: States Begin Providing Guidance on Property Tax for Same-Sex Couples

In the wake of courts striking down same-sex marriage bans in several states, tax agencies have provided a lot of guidance regarding how same-sex couples should file their income tax returns. Yet there has been little guidance on how these rulings affect property taxpayers. 

With Florida becoming the 36th state to allow same-sex marriages, now more than 70 percent of Americans live in jurisdictions that allow such marriages, according to the New York Times. This represents a major jump since as recently as June 2014, when approximately 44 percent of Americans lived in jurisdictions that allowed same-sex marriages. 

With such a rapid shift, it’s only a matter of time before the property tax implications of these decisions become more clear. Last week, the South Carolina Department of Revenue provided some guidance for same-sex couples in that state, after the U.S. Supreme Court left intact a federal judge’s order striking down the state’s ban. 

Same-sex couples will now be treated as spouses for all South Carolina taxes, according to the Dec. 30 revenue ruling. For property tax purposes, the main thrust of this ruling is that same-sex couples may now qualify for the reduced 4 percent assessment ratio and the homestead exemption. 

However, the ruling noted that being treated as spouses may actually negatively affect some same-sex couples. For example, if each individual of a same-sex couple owned their own residence, only one may now receive the 4 percent assessment, because as a married couple they may only maintain one legal residence.

The ruling also opens up other tax exemptions to same-sex couples, including those for homes of certain disabled veterans, law enforcement officers and firefighters, because same-sex individuals will now be included in the definition of “surviving spouse.”

And while same-sex marriages only began in Alaska in October, the Alaska Supreme Court in May held that same-sex couples are entitled to the same homestead exemption benefits as opposite-sex married couples even when only one member of the couple qualifies for the exemption. 

In Alaska v. Schmidt, No. S-14521 (April 25, 2014), same-sex couples had been denied full homestead exemptions because only one member of each couple qualified for the exemption, a distinction that did not affect heterosexual couples. The court found that this violated equal protection despite the state’s constitutional ban on same-sex marriage.

With same-sex marriage becoming legal in more and more states, look for those states to begin providing more guidance on the property tax implications of such decisions. 

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