|
Appraisal Ratio Changes Carry Over Whole Areas
Regardless of Whether a Specific Property's Value Has Kept Pace With Those
Around It
Real estate taxes generally represent a very significant expense on a financial
statement. In recent years, most companies have discovered that these taxes can
be somewhat controllable. To be sure that these real estate taxes are fair and
equitable, tax payers and tax recipients need to understand numerous concepts
that result in a taxpayer's real estate tax liability.
The underlying principals in most jurisdictions are "equalization" and
uniformity." Fairness and equitability are somewhat subjective, as establishing
real estate values is an art and not a science.
Equalization usually takes the form of a ratio analysis. This ratio is generally
a common level ratio, or of similar identification. An equalization ratio
usually applies to all property types.
The other primary constitutional concept for real estate assessment law is
"uniformity," which complements the ratio analysis. Commercial and industrial
properties often are assessed at higher ratios than residential properties.
Both these concepts and the process of a tax appeal are a specialty that
combines the knowledge and expertise of value and law. Expertise regarding
value and law, from professionals knowledgeable in both theses fields becomes
essential. It is imperative that the taxpayer has an overview of these
specialties, to determine the best course of action to assure fair and
equitable taxation for corporate owned real estate.
Typically, these values are at 100 percent if a recent reassessment has been
completed. There usually is also a "cushion" allowing municipalities to have a
variance if actual ratios vary by more than a certain percentage from the
predetermined ratio.
Actual ratios are predicated upon the transactions in any given municipality for
the previous year, from mathematical calculations of the transfer taxes
typically imposed upon transactions. The summation of these ratios of sale
prices to assessments for each municipality form the basis for that
municipality's actual assessment ratio.
Various concepts become relevant to ratio analysis. These include studies of
frequency distribution and central tendencies. Other statistical analyses
involve mean, median and modes. All of these concepts are pre-established, but
may also be challenged in an assessment appeal.
Return To Listing...
|
