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Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

Anyone planning on committing homestead-exemption fraud on a Miami-Dade property may want to rethink those plans. Recently, Miami-Dade Property Appraiser Carlos Lopez-Cantera enlisted the help of Miami-Dade Public Schools and local police departments to crack down on property tax cheats in the county. Mr. Lopez-Cantera is bringing in police officers from at least 10 cities and school districts to help with the investigation of those falsely claiming homestead exemptions.

Police officers are being trained to identify cheaters through looking for individuals claiming exemptions in multiple locations and cross checking exemptions with utility bills and driver’s licenses. The idea is that every officer can “have an impact on the pervasive fraud in our community and its impact on our schools.”

Just how big is this issue for Miami-Dade, you ask? The county has a backlog of 2,917 people who have committed homestead exemption fraud, and they just started the investigation program. That’s a lot of people who are about to get spanked by the law! When the county comes across one of these cheaters, they send the property owner a letter of intent to lien the property in 30 days if the amount due isn’t paid. This year alone, liens of $9.7 million have been filed.

Getting caught making a false claim with regard to your homestead exemption can result in up to ten years of unpaid back taxes, plus a 50% penalty and 15% annual interest on your property. That a pretty stiff punishment! I guess if you do the crime you do the time, or something like that.

For more property tax news, check out PropTax Minute at Advantax.com. Thanks for watching.

Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

According to the HeraldNet in Everett, Washington, there may not be a 37th Annual Everett Sausage Festival. The popular festival that has attracted crowds for 36 years may be forced to end. How can this be, you ask? Who is the culprit challenging the very existence of Sausage Fest? The simple answer… property tax law.

The Washington code states that, while the use of tax-exempt property for fundraising activities does not subject the property to taxation, 51% or more of the profit must go to the non-profit holding the event. Therein lies the problem! The event is held by Immaculate Conception & Our Lady of Perpetual Help School. People volunteer to staff the event and the profits go to the school. However, some of the vendors, such as carnival ride operators and music entertainers are paid and presumably make a profit. Thus the issue is unclear; much like the water after the sausage has boiled.

The effect of this Kielbasa killing code will affect other festivals as well, including another sausage festival in Vancouver, Washington. How can the smoke be taken out of this sausage? Supporters of the Sausage Festival are pushing for passage of WA House Bill 1215, which would clear up the issue and allow sausage festivals everywhere to move forward without fear of losing their property tax exemption. Hopefully, the bill will pass and the residents of Washington will not be denied their sausage festivals.

For more property tax news, check out proptax minute at advantax.com. Thanks for watching.

An easy way to remember the income approach to value using direct capitalization.

Welcome to PropTax Tutorials by Advantax. In this tutorial we’ll show you the income approach to value using direct capitalization. Sounds like a mouthful. We’ll try to keep it simple.

Let me introduce you to Irv. Some of you may remember him from property tax or valuation classes. Irv is a great guy to help us remember the concept of direct capitalization.

The I in IRV stands for income. The R stands for rate, also known as capitalization rate or cap rate. It’s basically your rate of return. The V stands for value.

If you want to calculate for income, take the value and multiply by the rate.

For example, if the value of the property is $100,000 and the rate is 10%, then the income is $10,000.

If you want to calculate the value of a property using direct capitalization, take the income produced by that property and divide it by the rate of return.

For example, if the income produced by the property is $10,000 and the rate of return is 10%, the value of the property is $100,000.

And Irv is flexible. Let’s say you are looking at the values and income produced by comparable properties and want to know what the rate is, simply rearrange Irv. Rate equals income divided by value.

For example, if the income produced by the property is $10,000 and the value of the property is $100,000, the rate is 10%.

Remember, when it comes to remembering how to use the direct capitalization, IRV is your friend.

Thanks for watching PropTax Tutorials by Advantax.

Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

Remember in Braveheart when William Wallace led a revolt against the English and their castles? All the drama as he led his men against the English army. Well, there’s a modern day castle siege happening in Christian County, Missouri. It’s kind of like Braveheart, minus all the killing and Mel Gibson. Robert and Bonnie Palmer have found their castle under siege by the Christian County Assessor’s Office. The Palmers own a 4,800–square-foot facility that’s an imitation of a 14th century French Castle. It’s used to host “fairy-tale” weddings. The castle is valued by the county at $1 million.

Mr. Palmer stated that they simply “don’t have the income to pay the taxes,” taxes based on that $1 million value. The property was assessed as a Class A commercial building, but the Palmers say it is in fact a Class E building, which would make it the equivalent of a barn. Mr. Palmer said, “I don’t know of any regulation that requires a barn to have any particular style or look, and it was, in fact, built as a barn.” While the building may look pretty on the outside; the Palmers say it has non-standard doors, false windows, a concrete floor and a lack of central heat and air, making it kind of like a barn.

After hearing both sides, the Christian County Board of Review lowered the value to $578,000. I don’t know how this value was arrived at. In fact, I’m not sure how one values a castle. But I am pretty sure William Wallace would consider it a victory.

For more property tax news, check out proptax minute at advantax.com.

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Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

Why do property taxes matter so much to businesses? A friend of mine was recently asked this question by a group of state officials. They were considering what was on the minds of their business constituency and wondering why that constituency was so concerned with property taxes. Here’s a few possibilities he shared:

Property taxes are the fastest growing tax of the big three state & local taxes. Over the past decade property taxes have grown 79%, while sales and income taxes have grown 38% and 28% respectively. Property tax growth has outpaced inflation. Property taxes only increase. Since the 1940s when property tax collections were first recorded on a national basis, total property tax collections have increased every year. The only exception was 2011 when they decreased 1.5%.

Property taxes increase even during a recession or depression. Property tax collections grew 10.5% from 2008 to 2009. While this is due to the timing lag between assessments and collections, it still hits business owners when they are hurting most. Property taxes account for the largest percentage of total state and local business taxes. Property taxes account for 38% of total state and local business taxes. Sales accounts for 20% and income accounts for just over 7%. State and local jurisdictions have become reliant on property taxes as a stable and consistent funding basis.

While most business owners understand the important role property taxes plays in funding state and local government, it’s the rate of increased growth and reliance on property taxes that has them concerned.

For more property tax news, check out proptax minute at advantax.com.

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Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

In the article by Blair Lee we get a mix of the humorous and painful ways new taxes are born, Blair writes:

“Consider all the ways we’re taxed. When we’re born (birth certificate), when we die (death certificate), when we make money (income tax), when we spend money (sales tax), when we own property (property tax), when we sell property (capital gains tax), when we go to a concert or ball game (amusement tax), when we own a vehicle (license, registration, tolls, gas tax) and special taxes on cell phones, tobacco, alcohol, energy, etc. Then, when we die, they tax our income all over again (death tax). Heck, they even tax our bowel movements (flush tax).

But if you thought they ran out of ways to tax us you badly misjudged our lawmakers’ creativity. Get ready for their newest invention, the rain tax. Here’s what’s going on:

In 2010 the Obama administration’s Environmental Protection Agency ordered Maryland to reduce stormwater runoff into the Chesapeake Bay so that nitrogen levels fall 22 percent and phosphorus falls 15 percent from current amounts. The price tag: $14.8 billion.

And where do we get the $14.8 billion? By taxing so-called “impervious surfaces,” anything that prevents rain water from seeping into the earth (roofs, driveways, patios, sidewalks, etc.) thereby causing stormwater run off. In other words, a rain tax.

And who levies this new rain tax? Witness how taxation, like rain, trickles down through the various pervious levels of government until it reaches the impervious level — me and you.”

Who would have ever thought of a “Rain Tax”???

For more property tax news, check out proptax minute at advantax.com.

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You may or may not remember when I blogged several months ago about being an American Airlines Road Warrior. The blog was titled, “How Does a Property Tax Guy get to be an American Airlines Road Warrior?” It was quite an honor to be selected from thousands of applicants telling their stories of travel. In January, I joined the other 4 Road Warriors in Curacao for a photo shoot and interviews with American Airlines.

Well, the American Way Magazine, Road Warrior Edition, is out! You can find it in seatbacks on all American Airlines flights between March 15-31, or at this link. In addition, they’re showing portions of our interviews on all American Airlines flights with inflight entertainment. You can also check that out here.

Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

AMC’s The Walking Dead is one of the most watched drama series on television right now. In the series, Sheriff Rick Leads a band of survivors in a post-apocalyptic world, battling zombies at every step. Main characters are constantly being killed of by the “walkers” in gruesome ways. Fortunately, the group meets up with an almost equal number of new survivors to replace them. Every new place they discover is eventually overrun by the “walkers”. This usually happens just about the time they start to get comfortable. The whole world is filled with walking dead.

In North Arlington, New Jersey, the dead outnumber the living by a ratio of 20 to 1, although none of the dead are currently walking. North Arlington has a huge, 250 acre graveyard, which takes up 20% of the town. The cemetery is currently exempt from property tax, like all other cemeteries in the state, but that could change. A bill was recently introduced to create PILOTs or payments in lieu of taxes, to be paid to towns were there is a tax-exempt cemetery. This could essentially bring in about $3 million in property tax revenue to the town. But, who is ultimately going to pay for this tax? The dead? That may be enough to get them up and walking.

For more property tax news, check out PropTax Minute at advantax.com.

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Welcome to Advantax, I’m Kevin DeSanti with your PropTax Minute.

An investigative unit from WISHTV in Indianapolis has recently uncovered a very interesting taxpayer conundrum. The problem is that nearly one-in-three (that’s 33%) Indiana lawmakers have paid their property taxes late at least once in the last five years, which equals a rate three times higher than the state average!

The investigative reporters spent weeks going through property tax records of lawmakers, requesting 5 years’ worth of data on businesses, homes, and condominiums owned by all Indiana legislators and their spouses. They found that 26% of the House and 34% of the Senate had made late payments in the last five years. Some were only late by a day or two, while others didn’t pay until months or even years later. At least 17 legislators paid late on more than one occasion over that period.

The situation has caused a stir, and many taxpayers have begun to ask why lawmakers can’t pay their property taxes on time. Lawmakers presumably are subject to the same late penalties as other taxpayers; however, do you think they should be given additional penalties for paying their taxes late due to their positions?

Let us know what you think at www.advantax.com

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