Did a Louisiana homeowner keep the homestead exemption after transferring the house to an LLC and retaining a usufruct?

Plain-English summary

A Calcasieu Parish assessor asked about a home transferred to a limited liability company by its owner, who kept a usufruct and continued living there. The 2013 opinion concluded the property did not qualify for the homestead exemption in that ownership arrangement. The AG read the constitutional exemption as limited to natural persons and qualifying trusts, not an LLC that held naked ownership.

The opinion said the exemption could be restored if the LLC transferred naked ownership back to the usufructuary. It also emphasized that assessors, subject to tax commission and court review, made the factual exemption determinations for particular taxpayers.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Homeowners who transferred property to an LLC

The AG said prior eligibility, continued occupancy, and a retained usufruct did not preserve the exemption when an LLC held naked ownership of the home.

Parish assessors

The opinion supplied a legal interpretation for the described arrangement while leaving each taxpayer's factual exemption determination to the assessor and the stated review process.

Common questions

Did retaining a usufruct keep the homestead exemption after an LLC transfer?

No. The AG concluded that the LLC ownership in the question made the home ineligible despite the former owner's continued occupancy and usufruct.

Could the exemption return if ownership changed again?

The opinion said it could be restored if the LLC transferred naked ownership back to the usufructuary.

Did the AG decide a particular taxpayer's assessment?

No. The AG said the assessor made that factual determination, with review by the tax commission and courts.

Background and statutory framework

The opinion read La. Const. art. VII, § 20(A)(1) and its related usufruct and natural-person provisions together. It described usufruct as a limited real right, citing La. Civ. Code art. 535, and focused on the LLC's ownership of the underlying property.

Citations

• La. Const. art. VII, § 20(A)(1): homestead requirement discussed by the AG.
• La. Civ. Code art. 535: definition of usufruct.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/13-0110

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

~tat.e of 1liouisiana
DEPARTMENT OF JUSTICE
P.O. BOX 94005
BATON ROUGE
JAMES D. uBUDOV" CALDWEll
70804-9005
ATTORNEY GENERAL

October 25, 2013
OPINION 13·0110

125 - TAXATION - Homestead exemption
Ms. Wendy Curphy Aguillard, CLA
La. Const. art. VII. § 2'
Calcasieu Parish Assessor
A bona fide homestead under La. Consl art. VII, § 20(A)(1l
P. O. Box 1346
that has been transferred to a LLC by the immediate prior
Lake Charles, Louisiana 70602
owner, who is a natural person who retained a usufruct over
the property after the transfer, and also qualified for the homestead exemption before transferring the property to the
Dear Ms. Aguillard: LLC, and who also continues to occupy the residence, is not
eligible for the homestead exemption.

Your request for an Attorney General's opinion has been assigned to me for research and reply. You ask whether a bona fide homestead under La. Const. art. VII, § 20(A)(1) that has been transferred to a limited liability company ("LLC") by the immediate prior owner, who is a natural person who retained a usufruct over the property after the transfer, and also qualified for the homestead exemption before transferring the property to the LLC, and who also continues to occupy the residence, is eligible for the homestead exemption.

First, we note that the authority to determine whether a particular taxpayer may be exempt from the payment of ad valorem taxes is a factual determination exclusively reserved by the Louisiana Constitution and state law to the assessor, subject to the review of the Louisiana Tax Commission and, ultimately, the courts.' While the Attorney General does not have the authority to determine whether a particular taxpayer's property is exempt from taxation, we direct your attention to the applicable law that may be used in making your determination.

The first and foremost principle in a tax exemption case is that an exemption, being an exceptional privilege, must be expressly and clearly conferred in plain terms.?
Exemption provisions are strictly construed against the taxpayer claiming the benefit of an exemption and must be unequivocally and affirmatively established by the taxpayer,"

1
La. Atty. Gen. Op. Nos. 01·144, 00-54, 96-438, and 94-603.
2
Showboat Star Partnership v. Slaughter, 00-1227, p.10 (LaAI3/01), 789 SO.2d 554, 560;
McNamara v. Central Marine Service, Inc., 507 So.2d 207, 208 (La.1987).
3 Archer Daniels Midland Company v. Parish School Board of the Parish of SI. Charles, 01-0511, p. 11 (La.11/28/01), 802 SO.2d 1270, 1278; Showboat, 00-1227 at 10, 789 So.2d at 560.

Page 2

Ms. Wendy Curphy Aguillard, CLA
Opinion 13-0110
Page -2­

The taxpayer's stringent burden is to overcome the judicial maxim that "to doubt is to deny the exemption."

The homestead exemption requirements are set forth in La. Const. art. VII, § 20(A), which provides, in pertinent part, as follows:

(1) The bona fide homestead, consisting of a tract of land or two or more tracts of land even if the land is classified and assessed at use value pursuant to Article VII, Section 18(C) of this constitution, with a residence on one tract and a field with or without timber on it, pasture, or garden on the other tract or tracts, not exceeding one hundred sixty acres, buildings and appurtenances, whether rural or urban, owned and occupied by any person or persons owning the property in indivision, shall be exempt from state, parish, and special ad valorem taxes to the extent of seven thousand five hundred dollars of the assessed valuation. The same homestead exemption shall also fully apply to the primary residence, including a mobile home, which serves as a bona fide home and which is owned and occupied by any person or persons owning the property in indivision, regardless of whether the homeowner owns the land upon which the home or mobile home is sited; however, this homestead exemption shall not apply to the land upon which such primary residence is sited if the homeowner does not own the land.

(4) The homestead exemption shall extend to property where the usufruct of the property has been granted to no more than two usufructuaries who were the immediate prior owners of the homestead and the homestead is occupied as such by a usufructuary. The provisions of this Subparagraph shall apply only to property which qualified for the homestead exemption immediately prior to the granting of such usufruct, or which would have qualified for the homestead exemption if such usufruct had not been granted.

(5) The homestead exemption shall extend only to a natural person or persons and to a trust created by a natural person or persons, in which the beneficiaries of the trust are a natural person or persons provided that the provisions of this Paragraph are otherwise satisfied.

Here, the issue is that the usufructuary occupies the homestead but no longer owns it.s

4
Sherwood Forest Country Club v. Litchfield, 2008-0194, p. 6 (La. 12/19/08), 998 So.2d 56, 61, citin9 Cffifinancial Retail Services Division of Citicorp Trust Bank, FSB v. Weiss, 372 Ark. 128, 271 s.w.ae 494 (2008).

Page 3

Ms. Wendy Curphy Aguillard, CLA
Opinion 13-0110
Page -3­

Generally, the ownership issue would not be a problem under La. Const. art. VII, § 20(A)(4), since the usufruct of the property has been granted to one usufructuary who was the immediate prior owner of the homestead, the homestead is occupied as such by the usufructuary, and the property qualified for the homestead exemption immediately prior to the granting of such usufruct.

However, La. Const. art. VII, § 20(A)(5) expressly provides that the homestead exemption shall extend only to a natural person and certain trusts. Since the current instance does not involve a trust, to qualify for the homestead exemption, the naked owner can only be a natural person, which is a human being.s An LLC is an entity to which the law attributes personality. Therefore, it is a juridical person.'

Considering the forgoing constitutional, codal, and jurisprudential authority, it is the opinion of this office that a bona fide homestead under La. Const. art. VII, § 20(A)(1) that has been transferred to a LLC by the immediate prior owner, who is a natural person who retained a usufruct over the property after the transfer, and also qualified for the homestead exemption before transferring the property to the LLC, and who also continues to occupy the residence, is not eligible for the homestead exemption.

Finally, we note that the homestead exemption could be restored if the LLC transfers naked ownership back to the usufructary.

We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.

Yours very truly,

JAMES D. "BUDDY" CALDWELL
Attomey General ~ I
By: ~ A-r tAr ~
BENJAMIN A. HUXEN II
Assistant Attorney General
JDC/BAH II

5
Under La. Civ. Code art. 535, usufruct is a real right of limited duration on the property of another.
6
La. Civ. Code art. 24.
7
Id.