HB80 Alabama 2023 Session

Summary

Primary Sponsor

Steve ClouseRepresentative

Republican

Session

Regular Session 2023

Title

Relating to the Insurance Premium Tax; to amend Section 27-4A-3, Code of Alabama 1975, to provide further for real property investments to qualify for the Alabama Real Property Investment Credit; and to make nonsubstantive, technical revisions to update the existing code language to current style.

Summary

HB80 would require real property investments to be occupied or used commercially for the majority of the tax year in order to qualify for the Alabama Real Property Investment Credit, and updates related language and rules.

What This Bill Does

It tightens eligibility for the Real Property Investment Credit by requiring investment properties to be occupied or in commercial use for more than half the year. It preserves the credit framework (0.10% of the insurer's Alabama premium tax for each $1 million of eligible real property value, with a total cap of 1% of premiums) and clarifies valuation and financing rules. It adds specific rules about how investments are counted (cost basis, debt adjustments, square-foot allocation for mixed use), exclusions for properties used in operations, aggregation with affiliates, and the role of the Department of Insurance; the changes take effect for tax years beginning after December 31, 2023.

Who It Affects

• Insurance companies doing business in Alabama (both domestic and foreign) that own real property investments in Alabama; they would only receive the credit for investments that are occupied or used commercially for a majority of the tax year, and their total credit is capped at 1% of their Alabama premium tax.
• Insurers with affiliates or properties used across multiple purposes; the bill allows aggregation across affiliates for determining credits and requires allocation of credits to insurers and their affiliates within set limits.

Key Provisions

• Occupancy requirement: Real property investments must be occupied or in commercial use for a majority of the taxable year to qualify for the Alabama Real Property Investment Credit.
• Credit amount and cap: For every $1,000,000 of eligible Alabama real property investments, a credit of 0.10% of the insurer's Alabama premiums; total real property investment credit cannot exceed 1% of the insurer's Alabama premiums.
• Qualifying investments and valuation: Investments include improved property owned by the insurer or an affiliate on Jan 1, 1993, and improvements or new construction placed in service on/after Jan 1, 1993; property is valued at cost (not book value or fair market value); debt financing is subtracted from cost, and the cost increases pro rata as underlying debt is paid off.
• Use and allocation: If real property is partly used for insurance operations, cost is allocated by square footage so the portion not used for insurance operations may qualify; mortgages secured by Alabama real property do not count as investments.
• Exclusions and interplay with other credits: The Alabama Real Property Investment Credit is not allowed for properties used in the insurer's operations where the Alabama Insurance Office Facilities Credit applies; credits may be aggregated across affiliates and allocated among insurers within defined limits.
• Administration and effectiveness: The Department of Insurance may adopt rules to implement the provisions; the occupancy-related change becomes effective for tax years beginning after December 31, 2023.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance Premium Tax, Amended Real Property Investment Credit