What is Constitutional Amendment #1?
It has been a traditional practice in Louisiana going back decades, if not even longer, that any type of new construction was not placed on the property tax rolls until the building or project was completed.
The property or land itself would be on the rolls and taxes would be paid on that. But the materials used to build the project were not taxed while construction was underway and the final improvements didn’t go onto the tax rolls until the project was completed.
That has been the case for any type of construction, whether it was a commercial or industrial project, or if someone was building a home or adding on.
During the 2017 Legislative Session Senator Mike Walsworth handled SB 140 to bring a constitutional amendment to allow the voters of Louisiana to make this protection permanent.
This amendment is meant to address the silence in the constitution about whether property taxes can be levied on construction materials before the construction is completed.
If this amendment passes, it will clarify that construction materials would be exempt from taxation until “construction is finished to the extent that the project can be used or occupied for its intended purpose.” It goes on to say that for projects constructed in multiple phases, any portion that is complete and available for its intended use is subject to assessment.
No one seems to know of anytime where the materials used to construct a project, building, or residence were assessed a property tax before the work was completed. Nevertheless, the constitution seems to be silent on this.
One thing that’s very clear is that this is not a small issue, and could cause added taxation to new homes and new businesses that would also lead to larger mortgages.