Property owners have seen the values of their homes and businesses skyrocket of the past decades. They have also regretted opening the tax assessment they receive in the mail. Some welcome news came from Montgomery this week. Governor Kay Ivey has signed legislation into law that caps the amount property tax can increase every year after reappraisals.

House Bill 73 (HB73) caps yearly property tax increases after a reappraisal. The legislation was amended several times on the House floor, bringing the final capped amount to 7%.

The bill initially capped residential property increase cap at 3% and commercial property at 5%. Pettus offered a floor amendment pushed by the League of Municipalities and county commissions. The amendment capped expenditures at 7% for both types of property.

The bill was initially set up for a three-year sunset, meaning the legislature would have to re-approve it after those three years. However, the Senate changed the sunset provision to occur every five years.

Exceptions to the 7% cap rule include:

• Real property that has never been assessed.
• Additions or improvements to real property, including new construction, not including repairs to or ordinary maintenance of an existing structure or the grounds of the property.
• Changes to the classification of the property.
• Changes in ownership of the property, except for transfers between spouse or family members for no or nominal consideration, including upon death of the owner and transfers due to redemption after foreclosure of a mortgage, tax sale or tax lien.
• Property located in a tax increment district.

Ivey signed the legislation into law on Thursday. It will go into effect on October 1.