Opinion Number ( 1991 )

Dear Ms. Guidry:

You requested the opinion of this office concerning the situation where an individual owns a corporation and the real estate the corporation operates on. The corporation, in its corporate capacity, makes, pays for and depreciates improvements to the real estate. Your question is would the corporation be liable for ad valorem taxes as leasehold improvements?

It is assumed that the property is not subject to any exemption from ad valorem taxation. The answer to your question would depend upon who is the owner of the improvements, the corporation or the individual. If the lease agreement in question provides that the improvements are to become the property of the individual at the termination of the lease, then the improvements are owned by the corporation and would be subject to ad valorem taxation. See Schulingkamp v. Heaton, 455 So.2d 1181 (La.App. 4th Cir. 1984) and Burbank v. Board of Assessors, 52 La.Ann. 1506,27 So. 947 (La. 1900). Corporations are assessed directly upon all taxable property owned by such corporations.

If, however, the improvements to the property are owned by the individual who owns the real estate, then the individual would be liable for the ad valorem taxes. Article VII, Section 18 of the Louisiana Constitution.

Trusting this adequately responds to your request, I remain

Sincerely,

WILLIAM J. GUSTE, JR. Attorney General

BY: MARTHA S. HESS Assistant Attorney General