New Orleans is ready to try to crack down on property owners claiming homestead exemptions on properties where they don’t actually live.
Money has been set aside in the 2016 budget plan for a pilot program to identify those owners and make sure the city and other government agencies in Orleans Parish are getting their due in taxes, Finance Director Norman Foster told the City Council during a budget presentation Monday.
More than 64,500 properties in New Orleans now have homestead exemptions, which exempt the first $75,000 of a home’s value from most property taxes if it is the owner’s primary residence. In all, those exemptions are worth a combined $69 million in tax savings annually.
It’s unclear exactly how many of those properties might be reaping the benefits of an improper exemption.
“I would be very happy if we found it was three people,” Foster said. “I think that would be very good for the taxpayers to know that the current process is working well — and not just believe that but have some verification.”
But given how many people are buying vacation homes and investment properties in the city — and the difficulty of tracking whether owners have primary dwellings elsewhere — the number of improper exemptions could be significant.
“This will give everyone else who does claim it and everyone else who pays taxes a sense that we are checking and we are verifying,” Foster said.
Assessor Erroll Williams’ office already makes some efforts to identify those who are cheating the system.
Analyses of the assessment database to find individuals who have two exempt properties in Orleans Parish have turned up about 200 people since Williams first took office as the parish’s sole assessor a few years ago, and every week a “half-dozen or a dozen” properties are identified as potentially problematic because mail sent there bounces back, Williams said. About 60 owners have had their homestead exemptions rescinded through that process this year, he said.
Williams and Foster said not all owners who are receiving homestead exemptions improperly are deliberately trying to cheat. They said some may not realize they are prohibited from claiming a homestead exemption in two jurisdictions or may have not realized they had to relinquish the exemption if they moved.
Several contractors who use databases to find potential issues with homestead exemptions — either by comparing the list of local exemptions with those from other jurisdictions or by using other databases to identify owners whose primary residence may be elsewhere — have contacted the city about undertaking such an effort, Foster said.
Several hundred thousand dollars would be available for the effort next year under Landrieu’s budget plan. The contractors the city has spoken with have said they take a percentage of the value of the improper homestead exemptions they identify, so the total cost of the program would depend on how many such properties are found.
The city would likely do a test run, pursuing only a limited number of properties, to see if the information from the firm selected could be acted on by the assessor, Foster said.
A property that is found to be improperly receiving a homestead exemption could be required to pay up to three years of back taxes, Foster said.
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