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OREGON ADMINISTRATIVE RULES

OAR 150-307.330 Exemption of Buildings During

or addition has been completed and is ready for use or occu-

Construction

pancy on January 1, although not in use, it is taxable. If com-

pleted and leased on January 1, but not occupied by the les-

1. Property Subject to Exemption:

see, it is taxable.

a. Building or structure, whether new or existing, includes

b. The exemption for manufacturing facilities cannot be

all real property improvements erected upon the land. Ho-

claimed for more than two years. If claimed for two years,

tels, office buildings, retail stores, and manufacturing plants

they must be successive. Conditions for exemption must ex-

are typical examples of the type of buildings subject to the

ist on January 1, of each year in which exemption is claimed.

exemption. Related improvements such as ramps, loading

c. The building, structure or addition must be intended pri-

docks, wharfs, and paved areas used for parking or storage

marily for the furtherance of the production of income.

are examples of structures subject to the exemption. Fills,

excavations, or grading and leveling associated with prepa-

d. No exemption may be allowed if use or occupancy is

ration of the site for construction are part of the land and are

made of the building, structure or addition, or any part thereof,

not subject to exemption.

on or before January 1, of any year in which the exemption

is claimed. Use or occupancy refers to that commercial use

b. Addition to an existing building or structure, includes any

or occupancy for which the building is intended upon comple-

enlargement or modification of such building or structure. An

tion. For example, the use of a warehouse for storage of ma-

example of enlargement of a building would be the construc-

terials or the rental of an apartment in a new apartment build-

tion of additional stories or the erection of a new wing on a

ing will defeat the exemption. Testing of equipment prepa-

building already standing on the site. Modification of a build-

ratory to operation is allowable during the period of construc-

ing occurs when all or part of the existing structure is used

tion. “Testing” can include a limited trial production run as a

in the erection of a new building. For example, the walls of

check of equipment and system performance. “Testing” in the

an existing theater building are used in the construction of a

context used does not contemplate the processing in substan-

retail store. In order to qualify for the exemption, the modifi-

tial quantity of finished and marketable products that are or

cation must change the nature of the building or structure.

can be disposed of through the usual channels of trade.

Merely adding a new store front or modernizing an existing

building is not enough to qualify for exemption. Installation

e. In the case of nonmanufacturing facilities, an exemption

of additional equipment in a building subsequent to its origi-

cannot be claimed if the facility is occupied or used within

nal construction does not qualify for further exemption. For

one year from the date the construction began. “Construction”

example, installation of an air-conditioning system or an el-

does not include demolition of existing buildings.

evator in an existing building does not qualify the building

f. All of the conditions listed in this section are mandatory

for exemption.

and a failure to meet any one of such conditions results in

c. Machinery or equipment which qualifies for exemption

denial of any exemption.

includes all machinery or equipment installed in or affixed

Note: The date change first applies to the 1992-93 tax year.

to such building, structure or addition, and all personal prop-

Hist: Eff. 11/59, Amended 11/61, 7/64, 1/66, 12/66, 3/70, 11/71, 12/31/97

erty that would qualify as real property under OAR

150-307.010(1) when installed or affixed which is actually situ-

OAR 150-307.340 Claim for Exemption under

ated at the place of construction on January 1, of each year

ORS 307.330

in which the exemption is claimed.

Where exemptions are being claimed for two consecutive

Machinery or equipment subject to exemption includes me-

years, as permitted by ORS 307.330, a separate claim must

chanical items associated with the building such as heating

be timely filed for each year.

equipment, elevators, ventilating systems, and similar equip-

Example: On January 1, a building meeting all the require-

ment normally installed as part of the building construction.

ments for exemption is under construction. Exemption may

Machinery and equipment housed within the building for the

be claimed by filing documentary proof of exempt status with

purpose of manufacturing, or otherwise processing raw or fin-

the assessor on or before April 1. In the event the building is

ished materials, is also subject to exemption.

still under construction and eligible for exemption on the fol-

2. Conditions of Exemption:

lowing January 1, documentary proof of eligibility must again

be filed with the assessor on or before April 1. These same

a. The building, structure or addition must be in the pro-

conditions and requirements likewise apply to the

cess of construction on January 1, of each year in which the

nonmanufacturing facilities except that any use or occupancy

exemption is claimed. Construction is in process once work

of the property for which the facility is intended within one

has begun or the foundation for the building, structure, or

year following the construction starting date will nullify the

addition was partially or wholly laid. Land is not a part of this

cancellation of assessment.

exemption. Therefore, site preparation is not considered as any

part of the process of construction. If the building, structure,

Hist: Eff. 11/59, Amended 7/64, 1/66, 2/68, 3/70, 11/71, 12/31/91, 12/31/97

150-310-020 (Rev. 9-01) (back)

Form 150-310-020 - Application For Cancellation Of Assessment On Commercial Facilities Under Construction - 2001 Page 2

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