With their wind, rain, and storm surges, the risk that hurricanes pose to homes and businesses have a direct impact on property tax assessments. States along the Gulf and East Coasts have accounted for the extra expense of preparing for such storms and the potential resulting damage with special property tax provisions.
Florida has the most thorough law relating to hurricanes. A homestead property damaged or destroyed by a named hurricane can have its assessed value reduced if the owner establishes a new homestead as of Jan. 1 of the second year following the storm. In addition, residential property owners can request an abatement from tax for the time a property was uninhabitable as a result of hurricane damage.
Alabama allows a residential property to retain its residential classification for up to 24 months if not used as the owner’s single-family dwelling because it is uninhabitable or being repaired as a result of being damaged by a natural disaster.
Moving up the East Coast, North Carolina deals with the possibility of hurricane damage by allowing cities or counties to establish special assessment districts to create or maintain beach erosion control and flood and hurricane protection works. In Virginia, counties, cities, and towns may grant abatements for buildings which are damaged or destroyed by events beyond the control of the owners. To qualify for the abatement, the value of the building must decrease by at least $500 and be rendered unfit for occupancy for at least 30 days. Maryland allows homeowners who qualify for the state homestead credit to receive an exemption if the home was damaged or destroyed due to a natural disaster and was subsequently repaired or reconstructed.
In addition to general provisions for requesting valuation changes, state revenue departments have often instituted special relief programs following major hurricanes. These programs often involve increasing grace periods for property tax payments and waiving interest and fees.
Preparedness is the best course of action in the face of a hurricane, so make sure to review both your safety plans and state’s disaster tax relief policies this hurricane season.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: How does your state account for valuation changes because of natural disasters?
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