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SB 346 Primer

SB 346 Primer. SB346 Primer Contents. OCGA 48-5-2: Definitions of FMV OCGA 48-5-18: Return of Property OCGA 48-5-306: Annual Notice of Assessment OCGA 48-5-311: Appeals Procedures OCGA 48-5-380: Refunds OCGA 48-5-303: Corrections to digest

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SB 346 Primer

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  1. SB 346 Primer FASTER. FRIENDLIER. EASIER.

  2. SB346 Primer Contents • OCGA 48-5-2: Definitions of FMV • OCGA 48-5-18: Return of Property • OCGA 48-5-306: Annual Notice of Assessment • OCGA 48-5-311: Appeals Procedures • OCGA 48-5-380: Refunds • OCGA 48-5-303: Corrections to digest • OCGA 48-5-304: Digest Submission when property under appeal • OCGA 48-5-32.1: Roll-Back Millage • OCGA 48-2-18: PU Assessments • OCGA 48-5-291: BOA Qualifications • OCGA 48-5-13: GCP Training FASTER. FRIENDLIER. EASIER.

  3. Contact Information • Vicki Lambert • Vicki.lambert@dor.ga.gov • Gregg Reese • Gregg.reese@dor.ga.gov • Tracy Thomas • Tracy.thomas@dor.ga.gov FASTER. FRIENDLIER. EASIER.

  4. Acronyms • BOA = Board of Assessors • BOE = Board of Equalization • TCO = Tax Commissioners Office • TAO = Tax Assessors Office FASTER. FRIENDLIER. EASIER.

  5. Definitions of Fair Market Value OCGA 48-5-2 FASTER. FRIENDLIER. EASIER.

  6. FMV Defined • New definitions • “Arms length bona fide sale” • Transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his or her own self-interest, including, but not limited to a distress sale, short sale, bank sale, or sale at public auction. FASTER. FRIENDLIER. EASIER.

  7. FMV Defined • “We should still be looking for FAIR MARKET VALUE we now have new guidance on how to achieve FMV” FASTER. FRIENDLIER. EASIER.

  8. FMV Defined • New Considerations • The income approach, if data is available, shall be considered in determining the fair market value of income-producing property • Think about … • Forest land, Farm land, Single-Family Residences • TAO should be prepared to evaluate the validity of the income approach data submitted by taxpayer FASTER. FRIENDLIER. EASIER.

  9. FMV Defined • The BOA shall apply the following • Zoning • Use • Covenants and Restrictions in the deed • Bank sales, other financial institution owned sales, distressed sales, any combination thereof • Decreased value resulting from conservation easements • Any other factors provided by law or by rule and regulation of the commissioner deemed pertinent in arriving at fair market value FASTER. FRIENDLIER. EASIER.

  10. FMV Defined • APM defines existing factors pertinent as: • The other factors the appraiser shall apply include, but are not limited to, environmental, economic, governmental, and social factors. Site-specific information that may be considered includes, but is not limited to, location, frontage, width, depth, shape, size, topography, landscaping, slope, view, drainage, hydrology, off-site improvements, soil condition, soil productivity, zoning, absorption, nuisances, use, covenants, neighborhood, corner influence, proximity to recreational water, and quality of access FASTER. FRIENDLIER. EASIER.

  11. FMV Defined • New Considerations • The transaction amount of the most recent arm’s length, bona fide sale in any year shall be the maximum allowable FMV for the next taxable year. • MAV rules still apply • ‘Most Recent Arms Length Sale’ defined by APM FASTER. FRIENDLIER. EASIER.

  12. Most Recent Arms Length Sale • Sales occurring during year prior to digest year • 2011 digest >> 2010 sales • 2012 digest >> 2011 sales • Transaction amount adjusted for non-real estate values (timber, personalty, etc) • Adjusted transaction amount applies only to exchanged property • The adjusted value of real estate shall remain in effect for at least the next digest year FASTER. FRIENDLIER. EASIER.

  13. MAV County FMV = 100,000 MAV = 75,000 Return = 50,000 SP = 60,000 Digest = 60,000 MAV County FMV = 100,000 MAV = 100,000 Return = 110,000 SP = 120,000 Digest = 100,000 Examples FASTER. FRIENDLIER. EASIER.

  14. Allowable Adjustments to Transaction Value • New improvements after sale date • Additions to existing (exchanged) improvements (structural footprint changes) • Major remodeling/renovations (no footprint change) • What is major? If you have to ask, it aint. • Land adjustments due to consolidation, new surveys, zoning, land use FASTER. FRIENDLIER. EASIER.

  15. Example • Sale of vacant lot 2/2010 = 40,000 • Site prep (4/2010) = 5,000 • House add (8/2010) = 200,000 • Digest value? • $245,000 FASTER. FRIENDLIER. EASIER.

  16. Example • Sale of vacant lot 1/2010 = 40,000 • Site prep (7/2009) = 5,000 • House add (8/2010) = 200,000 • Digest value? • $240,000 FASTER. FRIENDLIER. EASIER.

  17. Example • Sale of vacant tract 4/2010 = 750,000 • Timber value = 150,000 • House add (8/2010) = 200,000 • Digest value? • $800,000 (750,000 – 150,000 + 200,000) FASTER. FRIENDLIER. EASIER.

  18. Example • Sale of vacant tract 3/2010 = 750,000 • MAV = 700,000 • Timber value = 150,000 • Digest value? • $600,000 FASTER. FRIENDLIER. EASIER.

  19. Example • Sale of vacant tract 5/2010 = 750,000 • MAV = 500,000 • Timber value = 150,000 • House add (8/2010) = 200,000 • Digest value? • $700,000 (500,000 + 200,000) FASTER. FRIENDLIER. EASIER.

  20. Example • Sale of cut-over woodland tract 3/2010 = 900,000 (1000 acres) • Land cleared for row-crop use (3/2010) (cost $1000/ac) • MAV = 800,000 (woodland=800/ac) • Crop $/ac = $1500 • Digest value? • $1,500,000 (1000 acres @ $1500/ac) FASTER. FRIENDLIER. EASIER.

  21. Example • Sale of cut-over woodland tract 2/2010 = 700,000 (1000 acres) • Land cleared for row-crop use (3/2010) (cost $1000/ac) • MAV = 800,000 (woodland=800/ac) • Crop $/ac = $1500 • Digest value? • $1,400,000 • Cropland 1500 – woodland 800 = 700/ac improvements • (1000 acres @ $700/ac) = 700,000 of improvements • 700,000 of land exchanged in sale FASTER. FRIENDLIER. EASIER.

  22. Other Considerations to Transactions • Property Component Allocation • Sale price = 200,000 • MAV = 400,000 (300 House, 100 land) • Allocated SP = 150,000 house, 50 land FASTER. FRIENDLIER. EASIER.

  23. Other Considerations to Transactions • Multiple parcel transfers • Sale price = 2,000,000 • 1 Strip Center MAV = 3,000,000 (95.21%) • 1 Out parcel MAV = 150,000 (4.76%) • 1 retention pond = 1,000 (0.03%) • Digest allocation • Strip = 1,904,157 • Out Parcel = 95,208 • Pond = 635 FASTER. FRIENDLIER. EASIER.

  24. Other Considerations to Transactions • Splits • Original Parcel, 100 acres, MAV = 850,000 • Split 5 acres sold at 80,000 • Split 5 acres schedule value = 50,000 • Digest value of split? • $50,000 • Digest value of parent? • $8500 * 95 acres = $807,500 FASTER. FRIENDLIER. EASIER.

  25. Other Considerations to Transactions • Property Component Allocation • Sale price = 200,000 • MAV = 400,000 (300 House, 100 land) • Allocated SP = 150,000 house, 50 land • CUV land value = 52,000 • What is digest value? FASTER. FRIENDLIER. EASIER.

  26. Other Considerations to Transactions • Splits • Original Parcel, 100 acres, MAV = 850,000 • Split 5 acres sold at 80,000 • Split 5 acres schedule value = 150,000 • Digest value of split? • $80,000 • Digest value of parent? • $8500 * 95 acres = $807,500 FASTER. FRIENDLIER. EASIER.

  27. Other Considerations to Transactions • Adjustments for Intangibles • Saleprice of Zaxby’s = $485,000 • Franchise = $35,000 • Lot = $100,000 • Building = $250,000 • PP fixtures = $150,000 • Total = 535,000 • SP less non-real estate items • $485,000 less 35,000 less 150,000 = 300,000 • Land + Building MAV = 350,000 • Land = 37.50%, building = 62.50% • Adjusted Transaction Amounts • 300,000 * 37.50% = 112,500 • 300,000 * 62.50% = 187,500 FASTER. FRIENDLIER. EASIER.

  28. Examples … • 3/2010 FM Sale = 45,000 • 7/2010 FM Sale = 65,000 • 11/2010 Odd Financing Sale = 130,000 • Digest Value? • 65,000 FASTER. FRIENDLIER. EASIER.

  29. Examples … • 2009 BOE – 75,000 • 2010 SP – 80,000 • 2011 Digest value? • 75,000 FASTER. FRIENDLIER. EASIER.

  30. Examples … • 2009 BOE – 90,000 • 2010 SP – 80,000 • 2011 Digest value? • 80,000 FASTER. FRIENDLIER. EASIER.

  31. Examples … • 2010 FMV – 150,000 • 2010 MAV – 100,000 • 2010 SP – 120,000 • 2010 BOE – 120,000 • 2011 Digest value? • 100,000 FASTER. FRIENDLIER. EASIER.

  32. Examples … • 2010 FMV – 120,000 • 2010 MAV – 100,000 • 2010 SP – 90,000 • 2010 BOE – 120,000 • 2011 Digest value? • 90,000 FASTER. FRIENDLIER. EASIER.

  33. Return of Property FASTER. FRIENDLIER. EASIER.

  34. Return of Property • Deadline for return of property for all counties in Georgia is now APRIL 1st • Do not discourage your taxpayers from filing returns. FASTER. FRIENDLIER. EASIER.

  35. Annual Notice of Assessment FASTER. FRIENDLIER. EASIER.

  36. FASTER. FRIENDLIER. EASIER.

  37. Annual Notice of Assessment • BOA shall give notice to: • Taxable Real property, all of it, changed or unchanged • Personal property whereby the property owner’s return value is changed by BOA • Return value is either previous value or the property owner’s actual stated return value FASTER. FRIENDLIER. EASIER.

  38. Annual Notice of Assessment • NOA must be sent by: • July 1st if the value does not change • July 1st deadline does not apply to mapping changes or corrections • Must use PT-306 form • Includes estimated tax for each levy authority • Strongly recommend inclusion of exemptions and fees • Emergency rule adopted and form available on website at • https://etax.dor.ga.gov/ptd/proposedrules/01-01-2011_LGSD_Emergency_Regulations.pdf FASTER. FRIENDLIER. EASIER.

  39. NOA Examples • Freeport • Tools of Manual Labor • Conservation Use • PP <= 7500 FASTER. FRIENDLIER. EASIER.

  40. NOA Freeport • Merchandise – 100,000 • Raw Materials – 50,000 • Total Inventory = 150,000 • Freeport applied for and approved by BOA • 50,000 FASTER. FRIENDLIER. EASIER.

  41. NOA - Freeport FASTER. FRIENDLIER. EASIER.

  42. NOA – Tools of Manual Labor FASTER. FRIENDLIER. EASIER.

  43. NOA - CUV FASTER. FRIENDLIER. EASIER.

  44. NOA – PP <= 7500 FASTER. FRIENDLIER. EASIER.

  45. FASTER. FRIENDLIER. EASIER.

  46. Posting Notice on Certain Conditions Undeliverable notices may be posted on website in-lieu of posting on courthouse door FASTER. FRIENDLIER. EASIER.

  47. Records and Information Availability Minimum documents are identified in DOR regulations for BOA appeals procedures FASTER. FRIENDLIER. EASIER.

  48. Description of Current Assessment FASTER. FRIENDLIER. EASIER.

  49. Description of Current Assessment • Simple non-technical reasons for change still required • Standard reason for notice of no-change • Annual Notice: No change in return/previous value • Standard reason for transaction value • Value adj for 1-year Arms Length Transaction cap • Standard reason for removal of transaction value • 1-year Arms Length Transaction cap removed FASTER. FRIENDLIER. EASIER.

  50. Appeals Procedures OCGA 48-5-311 FASTER. FRIENDLIER. EASIER.

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