Are any taxing jurisdictions using cap rates to determine tax assessments on commercial real estate? JAD

A local practitioner is appealing an assessment reportedly using cap rate on a sit down restaurant to determine current assessment, plus he also wants deduction for vacancy rates even though the property is fully leased and owner occupied. Does any of this approach make sense? Is it an approach that other practitioners are using?
In Property Management - Asked by John D. - Apr 9, 2015
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Dean G.
Jacksonville, FL

This is going to require state specific investigation into how the State Department of Revenue outlines the way property taxes are assessed, the formulas used, and acceptable procedures. This would require either research at your district property appraiser's office, who will enforce the guidelines handed down for property taxation by the state, and should maintain a book of the rules as outlined by the Department of Revenue. For any appraisal, the three methods of valuation, Reproduction or Replacement Cost Approach, Income Approach and the Comparable Sales Approach to Valuation. Be prepared for any state to use any or all of these methods, as the methods handed down by the Appraisal Institute are going to be referenced. A state may decide to tax based on a 7% - 15% discount on the most recent sales price evaluation. Florida has their own specific guidelines. .

Apr 10, 2015
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