Attention, Alabama home builders:


This year, the Alabama legislature passed Act 2011-544, the “Homeowners and Storm Victims Protection Act of 2011”.  The act became effective on September 1, 2011.  A provision in the act reduces ad valorem taxes you pay on your inventoried houses and underlying lots by 50% for a period of 24 months.  This reduction is accomplished in the act by re-classifying inventoried houses from Class II property to Class III property.  However, in order to benefit from this reduction in ad valorem tax you are required to act no later than September 30, 2011.  You must file an application with your county tax assessor’s office to request the reclassification of your inventoried properties from Class II to Class III.  There is not yet a formal application to use to request the reclassification.  The Home Builders Association of Alabama recommends that you use their checklist to apply for the property reclassification (attached).  After assembling each item on the checklist for each property you want to reclassify, you should submit the materials to your respective county tax office no later than September 30, 2011.


Please be aware that the Alabama Department of Revenue believes Act 2011-544 applies only to tax years 2011 and 2012.  The Home Builders Association of Alabama (HBAA) disagrees, stating that the act should apply to the current tax year, too.  It is the opinion of the HBAA that home builders should apply by 9/30/11 for the re-classification of any house that was under construction prior to September 1, 2011 in order to argue for the reclassification of your properties for the current year (which runs from October 1, 2010 to September 30, 2011).  The HBAA believes that, by the time the differences of opinion are resolved, it will be too late for you to apply for the reclassification of property for the current year.  As a result, you would miss the opportunity to pay the lower ad valorem rate for this tax year.


Please see the letter mailed by the Home Builders Association of Alabama to its members and the checklist they recommend using for the reclassification request.  Please contact us if we can assist you in this process.  We are here to help.