Alternative administration of 288 homestead improvement exemption
The 288 homestead improvement exemption is designed as an incentive to taxpayers to improve their homes, or a tax relieve to homeowners suffering from a natural disaster. The latter is a more rare case. A taxpayer can claim the exemption after make a significant physical improvement to their home, an addition, for example. The exemption is worth up to $75,000 of fair cash value for 4 to 6 years. The duration depends on the timing of the claim to the exemption.
The way we administer this exemption is as follows: consider a 2 br 1 fbth, 1,800 sf home that adds a master suite addition. This would add 1 additional bedroom and bathroom, and an additional 800 sf in interior living space. However, this homeowners has claimed the 288 exemption. Therefore, these additional characteristics are not added to the home’s characteristics in the ANIQ data on the AS400. Instead, they are stored separately, and added to the home’s characteristics once the 288 expires.
Historically, this caused distortion in the modeling of homes. This is so because, in your modeling sample, the characteristics of sold homes were distorted by the 288. We have solved this problem by automatically adding all 288s to characteristics in the modeling data. However, in the valuation data, the 288s remain. This can have an impact on our IAAO statistics since the sale prices of homes with 288 reflect the additional characteristics, but the assessments do not.
We would like to develop an alternative method of administering this exemption that is more clear, and does not influence our IAAO ratio statistics.