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Welcome to Advantax. I’m Owen Jensen with your PropTax Minute.

Determining the value of complex, special purpose facilities can present a formidable challenge to appraisers. Because special purpose facilities may be one-of-a-kind, there is often no option of comparison to other facilities for market value determination. For this reason, the cost approach has been the historic standard for the appraisal of complex properties. Unfortunately, because the cost approach does not always consider all forms of obsolescence, it often leads to inflated estimates of fair market value.

The first step in the cost approach is to determine the replacement cost new (RCN) for the facility. When performing a cost approach appraisal, you must keep changing technology in mind. The natural evolution of technological process and improvements in materials over time often renders yesterday’s technology obsolete in terms of capital costs. This concept figures how much it would cost to replace the current facility with one that duplicates the utility of the existing facility using current technology and materials at current prices.

Once RCN is calculated, the next step is to quantify depreciation. Depreciation is defined as the loss in value from all causes, and its estimation is one of the most subjective areas of the cost approach. All forms of depreciation should be taken into account: physical deterioration, functional obsolescence, and external obsolescence. Under the appraisal principle of substitution, an informed and willing buyer would pay no more for a facility than the cost to build or acquire a facility with equal utility.

Of course, that’s just a quick summary of the cost approach and how it works. If you would like to learn more about it contact us at advantax.com

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Welcome to Advantax. I’m Regina Waldroup with your PropTax Minute.

It’s Academy Awards season! While watching the award show recently, I thought, “what if there were academy awards for property tax appeals?”

Based on my experiences, we’d have to go with the following nominees:

Best Actor:
Several faces come to mind when thinking about best actor. On one hand there is the attorney who slammed his files onto the court room table, waved his arms around and spoke mostly to the window. There is also the corporate representative who simply stated “we are paying too much $(%*& money in property taxes!” and stormed out of the negotiation. Tough call.

Best Supporting Actor:
Best supporting actor is a no brainer. It has to go to the board member who fell asleep during the hearing. Coming in in a close second is the person referred to multiple times at the hearing who wasn’t actually present…

Sound Editing:
Hands down, the winner for the sound editing category goes to the guy running the cassette recorder with the little plastic microphone.

Cinematography:
This one is a toss-up between the smoke-filled room in Tennessee and the steps of the courthouse in New Jersey.

So maybe the Academy Awards of property tax appeals won’t be as big as the Academy Awards of Motion Pictures. Our dramas won’t be as dark, the dialog may not be as good, there will definitely not be as many deaths, and the scenes may not be as visually stimulating. But it would be interesting.

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Welcome to Advantax. I’m Regina Waldroup with your PropTax Minute.

The word “plague” brings many other words to mind – contagious diseases, natural disasters, swarms of locusts, and so on. But do you think of property tax lien sales? It’s unlikely, but maybe you should!

Property tax lien sales are the sale of a property by the taxing jurisdiction to an investor if the owner of the property fails to pay their property tax bills. For example, a property worth $300,000 can be sold to an investor for what is owed in property taxes, which is sometimes only a few hundred bucks. The investor can then resell the property for a huge profit. In the process, the owner of the property may lose all the equity they have in the property. The victims of this plague are often the elderly and those suffering from cognitive disorders.
Property tax lien sales total $15 billion in the US and are rising. Fortunately, there is a plan to keep this rising plague from going viral. Limitations on the investors of property tax lien sales seem to be a step in the right direction. Allowing the court to step in and confirm that the sale is fair, legal and that excess funds resulting from a sale are distributed back to the homeowner would be another.

Maybe we can actually catch this thing before it gets worse.
For more property tax news, check out PropTax Minute at advantax.com.
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Welcome to Advantax. I’m Regina Waldroup with your PropTax Minute.

There are a lot of mixed feelings about government spending in relation to property taxes. On one hand we have county officials saying they need more money or they will have to cut services. But on the other hand we hear the cries of the taxpayers against excessive government spending. These arguments are especially true for school spending, which is over half of all property tax revenues.

So the question is — are school districts effective when spending their property tax dollars? Should some districts be spending more? Are some districts spending too much?
Let me introduce you to a very informative site that will give you the opportunity to decide for yourself (at least when it comes to school districts in IL). The site is www.familytaxpayers.org. “Family Taxpayers Foundation (FTF) is an advocate for an efficient, high quality public education system in Illinois and for responsible, effective use of tax dollars by local and state government. FTF’s goal is to raise public awareness of abuses within the public education system and strive to influence public opinion in favor of solutions that will bring about real reform in public education.”

The website familytaxpayers.org is a resource for people to decide for themselves what they think about government spending.

Thanks for watching PropTax Minute. For more PropTax news, check out advantax.com.

Welcome to Advantax. I’m Regina Waldroup with your PropTax Minute.

In 1662, England tried to make a correlation between hearths, which are precursors to furnaces, and property taxes. In an attempt to establish a cohesive and fair system for valuing every property, they introduced a new property tax known as the “Hearth Tax”. Its sole factor was to establish value based on one aspect — the number of hearths in each home. A small home might have only one hearth in the main room, while a larger home would have several. They would be valued accordingly.

The hearth method of property taxation did bring some unity to how buildings were assessed; however it turned out to be widely hated by the public. Surprisingly, it had a seven-year run before being phased out. Imagine how enjoyable it would be to live in the colder regions of England during that time. Wanting that extra hearth but feeling the additional property taxes.

I wonder if the purchase of heavy blankets would have been considered a property tax planning strategy back then.

For more property tax news, check out PropTax Minute at advantax.com.
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Welcome to Advantax. I’m Owen Jensen with your PropTax Minute.

So you just got your property tax bill and your steaming mad at how much it’s gone up. This should make you feel better. The President of the U.S., who lives in that beautiful mansion known as The White House, doesn’t a pay a dime in property taxes.
The 55,000 square foot bungalow has 132 rooms, including 16 bedrooms, 3 kitchens, 3 elevators, 28 fireplaces, 35 bathrooms, a tennis court, bowling alley and underground bunker. And just in case location is important to you, it sits on 18 acres centrally located in Washington D.C.

If you were interested in purchasing the White House it would cost you, by some estimates, about $252,000,000.

What if the White House was subject to property taxes? How much would that be? Using property tax rates for Washington D.C., which are just under 1% for residential property taxes, they would be around $2.5 million.

So the trick to not paying property taxes – run for president, and win.
Good luck. For more on the PropTax Minute, visit us at advantax.com
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Welcome to Advantax. I’m Regina Waldroup with your PropTax Minute.

Several years ago we were involved in a court case. It was highly contested and full of ill will. In fact, after the taxpayer challenged the value, the assessor decided to double it! After fierce arguments in court the decision came out in favor of the taxpayer, to the penny. Even though angered by the result, the assessor seemed to fall in line with the court decision.

For several years following the case, they accepted the taxpayer’s returns as filed. What had started as a bad relationship became a good relationship. Then, one day the assessor stopped accepting the taxpayer’s returns and once again became very difficult to work with.

Why does a bad relationship between a taxpayer and assessor suddenly change to a good relationship? Why does a seemingly good relationship become one filled with conflict? Why the love/hate? Perhaps the great poet, Lady GaGa, was contemplating relationships between taxpayers and assessors when she penned, “I want your love and I want your revenge. You and me could write a bad romance.”

For more property tax news, check out PropTax Minute at advantax.com.
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Welcome to Advantax.I’m Owen Jensen with your PropTax Minute.

In addition to the private sector, the great recession has slammed local governments pretty hard. The effects are still playing out. Even in your local tax office. In fact, don’t be surprised if you find that you are not dealing with a county employee on your business personal property return going forward.

Case in point: Gwinnett County, Georgia has outsourced all of the commercial/industrial and business personal property accounts to two private firms. It was part of a larger effort on the part of the county to deal with significant financial strain.

But now, big questions are being raised by that move:
For starters…will the change affect the service level (positively or negatively)? What does it look like to add a “for-profit” motive to the assessment function? Will it create a more adversarial environment for taxpayers? Is the assessor’s office the right place for privatization? Challenging times causing a lot of change…and prompting some pertinent questions too. Not just in Georgia, but all around the nation.

If you need help managing your property taxes – we can assist you.
Visit our website – at advantax.com. Thanks for watching.

Welcome to Advantax. I’m Regina Waldroup with your PropTax Minute.

Cyber Monday, the Monday after Thanksgiving, made its debut in 2005. Since that time it has grown significantly, with an estimated crowd of over 100 million people shopping online on Cyber Monday. Online items are generally a good deal. However, if you’re not paying attention you might be disappointed to find the final cost is significantly higher than you anticipated, due to “handling charges”.

It is frustrating to think you’re getting a good deal, only to find out it’s not really what it seems. Unfortunately, this can be the case with property tax abatements. You can get a tax bill based on a value that is significantly higher than anticipated if you’re not careful. Review the cost basis and values the assessor’s office is using to make sure they reflect fair market value. What good is a partial abatement of property taxes if the property is being over valued in the first place?

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

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