254 P.3d 726
Okla. Civ. App.2011Background
- Owner Stillwater Housing Associates developed a low income housing project in Stillwater, Oklahoma and sought federal § 42 tax credits to finance it.
- OHFA approved annual tax credits totaling $455,235, which were allocated to limited partners and flowed through to them.
- Assessor valued the property for ad valorem tax purposes and the Board later capitalized the tax credits as income, increasing assessed value.
- Trial court granted partial summary judgment that tax credits are intangible personal property and exempt from ad valorem taxation, and ordered valuation accordingly.
- Owner appealed, and Assessor challenged the rulings on legal grounds, with the appellate court reviewing de novo.
- Court concludes tax credits are intangible personal property and not income, thus exempt from ad valorem taxation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are low income housing tax credits income of the property for ad valorem tax purposes? | Owner argues credits are not income; they are an intangible asset. | Assessor argues credits are real property rights that increase land value. | Tax credits are not income. |
| Are the credits exempt as intangible personal property under Art. X, § 6A of the Oklahoma Constitution? | Owner contends credits fall within intangible property and are exempt. | Assessor argues credits are not within the enumerated intangible property category. | Credits are intangible personal property exempt from taxation. |
| Should the property be valued including tax credits as income to determine market value? | Owner asserts credits should not be included as income in valuation. | Assessor asserts capitalization of credits as income is appropriate to value. | Credits not treated as income for valuation; exemption applies. |
Key Cases Cited
- Missouri Gas Energy, Div. of Southern Union Co. v. Tax Years 1998, 1999, 2000, 234 P.3d 938 (Okla. 2008) (tax credits considered credits against income taxes, not income)
- Randall v. Loftsgaarden, 478 U.S. 647 (U.S. Supreme Court 1986) (tax credits are not income for damages calculations)