Property Subject to Taxation

ORS 307.330
Commercial facilities under construction


Except for property centrally assessed by the Department of Revenue, each new building or structure or addition to an existing building or structure is exempt from taxation for each assessment year of not more than two consecutive years if the building, structure or addition:


Is in the process of construction on January 1;


Is not in use or occupancy on January 1;


Has not been in use or occupancy at any time prior to such January 1 date;


Is being constructed in furtherance of the production of income; and


Is, in the case of nonmanufacturing facilities, to be first used or occupied not less than one year from the time construction commences. Construction shall not be deemed to have commenced until after demolition, if any, is completed.


If the property otherwise qualifies for exemption under this section and ORS 307.340 (Filing proof for cancellation of assessment), the exemption shall likewise apply to any machinery or equipment located at the construction site which is or will be installed in or affixed to such building, structure or addition. [1959 c.246 §1; 1961 c.552 §1; 1971 c.284 §1; 1991 c.459 §55; 1997 c.541 §117]

Notes of Decisions

Applicant is required to file proof that property meets each requirement for exemption, notwithstanding that assessor may possess same information from other sources. Urban Office & Parking v. Dept. of Rev., 4 OTR 523 (1971)

In using term "structure," legislature intended that complex of buildings designed for specific use and not adaptable to any other purpose could be regarded as useless until whole complex or structure is operable and that completed buildings not be subject to taxation until whole complex of buildings is completed. Collier Carbon v. Dept. of Rev., 5 OTR 1 (1972), aff'd263 Or 414, 502 P2d 595 (1972); Multnomah County v. Dept. of Rev., 13 OTR 147 (1994)

Once having selected the two consecutive years for exemption the taxpayer cannot revoke his selection and secure the exemption for different consecutive years. Georgia-Pac. Corp. v. Dept. of Rev., 264 Or 260, 504 P2d 704 (1972)

The extent of the exempt construction must be limited to the basic functional and substantially necessary elements of the structure. Allen v. Dept. of Rev., 5 OTR 185 (1973)

A structure under construction is eligible for property tax exemption under this section if it is used for production but fails to produce a commercially acceptable product. Multnomah County v. Dept. of Rev., 5 OTR 437 (1974)

Where only two percent of facility was used for manufacturing "kits" for installation on aircraft, facility did not qualify for exemption as a manufacturing facility under construction. Aero Air, Inc. v. Dept. of Revenue, 8 OTR 461 (1980)

Based on legislative intent behind this section which was to promote state's economy, together with technological and scientific complexity of operation, salmon hatchery operation was income-producing facility other than nonmanufacturing facility and entitled to tax exemption provided by this section. Bain v. Dept. of Revenue, 293 Or 163, 646 P2d 12 (1982)

Use of part of facility during construction period for purpose of facilitating further construction was not "use or occupancy" where not for purpose of income generation. Multnomah County v. Dept. of Rev., 13 OTR 147 (1994)

Use or occupancy of portion of nonindustrial building or structure within one year of commencement of construction negates exemption even though building or structure is not complete. Multnomah County v. Dept. of Rev., 13 OTR 223 (1995)

Building or structure cannot be divided into separate portions so that one portion qualifies for exemption but other portion does not. Multnomah County v. Dept. of Rev., 13 OTR 223 (1995)

Property being constructed in furtherance of "production of income" includes building constructed for purpose of one-time gain on sale of property. North Harbour Corp. v. Dept. of Revenue, 16 OTR 91 (2002)

"Building" means single, self-contained unit designed for occupancy. Trendwest Resorts, Inc. v. Dept. of Revenue, 18 OTR 187 (2005), aff'd 340 Or 413, 134 P3d 932 (2006)

"Structure" means: 1) single, self-contained unit not designed for occupancy; or 2) combination of at least two interdependent units, one of which may be building. Trendwest Resorts, Inc. v. Dept. of Revenue, 18 OTR 187 (2005), aff'd 340 Or 413, 134 P3d 932 (2006)

Use or occupancy need not be in furtherance of production of income. Trendwest Resorts, Inc. v. Dept. of Revenue, 340 Or 413, 134 P3d 932 (2006)

Chapter 307

Atty. Gen. Opinions

Validity of ad valorem and severance taxation of logs destined for export, (1975) Vol 37, p 427; application of Article XI, section 11b of Oregon Constitution to this chapter, (1990) Vol 46, p 388

Law Review Citations

5 EL 516 (1975)


Last accessed
Jun. 26, 2021