Department of Revenue
Chapter 150
Division 307
PROPERTY SUBJECT TO TAXATION
150-307-0430
Exemption of Buildings, Structures and Machinery or Equipment during Construction
(1) Definitions for purposes of ORS 307.330 and this rule:
(a) “Addition” means any enlargement of an existing building or structure. This includes the construction of additional stories or the erection of a new wing on an existing building.
(b) “Building” means all real property improvements erected upon the land such as hotels, office buildings, retail stores, condominiums and manufacturing plants and includes heating and ventilating systems, elevators, and similar equipment normally installed as part of the building construction.
(c) “Completed” means the building, structure or addition is ready for its intended use or occupancy.
(d) “In the process of construction” means that construction of the new building, structure or addition has begun, but is not yet completed, and typically the foundation is partially or wholly laid. Site preparation or demolition of an existing building or structure is not considered part of the construction process.
(e) “In use or occupancy” means the property is being utilized in the manner for which the completed building, structure or addition was intended.
(f) “Land” means land in its natural state and includes site development such as fill, excavation, grading and leveling.
(g) “Machinery or equipment” includes machinery or equipment housed within the building, structure or addition for the purpose of manufacturing or otherwise processing raw or finished materials.
(h) “Modernization” means to take corrective measures to bring a property into conformity with changes in style.
(i) “Structure” means all real property improvements, other than buildings, and includes improvements such as ramps, loading docks, wharfs, and paved areas used for parking or storage.
(j) “Testing" means a limited trial production run as a check of equipment and system performance, but does not include the processing of a substantial quantity of finished and marketable products that are, or can be, sold through the usual channels of trade.
(2) Property eligible for exemption:
(a) New building, structure or addition to an existing building or structure that is in the process of construction on January 1 of each assessment year in which exemption is claimed. The building, structure or addition must be intended primarily for the furtherance of the production of income, whether from a one-time sale of property or an ongoing stream of income. For example, a new condominium project being constructed for future sale to purchasers, who may live on the property or rent the property to others, will qualify for exemption.
(b) Machinery or equipment located at the construction site or installed in or affixed to a building, structure or addition. Testing of equipment is allowable during the period of construction.
(c) All personal property that would qualify as real property under OAR 150-307-0010 that is situated at the place of construction on January 1 of each assessment year in which exemption is claimed.
(3) Manufacturing facilities may claim exemption for no more than two consecutive years. Conditions for exemption must exist on January 1 of each assessment year in which exemption is claimed.
(4) Property not eligible for exemption:
(a) Land.
(b) Modernization of an existing building or structure.
(c) Heating equipment, elevators, ventilating systems and similar equipment installed in a building after its original construction.
(d) Property constructed for residential occupancy by the owner.
(e) Nonmanufacturing facilities, of any kind, completed less than one year from the date construction began.
(5) No exemption may be allowed if use or occupancy is made of the building, structure or addition, or any part thereof, on or before January 1 of any assessment year in which exemption is claimed.
(a) If the building, structure or addition is completed and ready for use or occupancy on January 1, although not in use, it is taxable.
(b) If the building, structure or addition is completed and leased on January 1, but not occupied by the lessee, it is taxable.
Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.330
History:
Renumbered from 150-307.330, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
11-71
3-70
12-66
1-66
7-64
11-61
11-59