What You Should Know About Market Value When You File a Florida Value Adjustment Board Petition

OCALA, Fla., Sept. 10 /PRNewswire/ -- For Florida property tax appeals, there are three types of property values. Each has a different meaning. They are:

• market value
• assessed value
• taxable value

For a Value Adjustment Board (VAB) petitioner to obtain a reduction in property taxes, the VAB hearing officer must recommend a reduction in market value. In order to lower taxes market value must be below the assessed value of the property.

What is market value?

For VAB purposes, market value is the unencumbered fee simple estate of a property as if offered to the market in an arm’s length transaction on January 1st of the calendar year.

Unencumbered fee simple estate generally means a property that is not subject to leases, mortgages, or similar forms of encumbrances. Effectively, it’s a legal hypothetical intended to create uniformity in assessments.

Florida Department of Revenue (DOR) Real Property Guidelines, found in Florida Administrative Code 12D-51.003, publishes a specific definition of an arm’s length transaction. The definition is applicable to tangible personal property in addition to real property.

• Section 3.1.8 Arm’s-Length Transaction. This means a sale or lease transaction for real property where the parties involved are not affected by undue stimuli from family, business, financial, or personal factors.

This definition of an arm’s length transaction eliminates sale or lease contracts in which foreclosures or even short sales took place, or where sale/leasebacks, build-to-suit, corporate guarantees, or other unconventional financial characteristics were involved. The January 1st date also eliminates transactions that close during the months following January 1st. A DOR Bulletin suggests any transactions that close after January 1st must be probative of value on January 1st. In plain English, when was an offer negotiated?

For assessment purposes, the arm’s length market data used is collected from the period proceeding January 1st. So, in 2010, VAB petitioners should apply market data dated during 2009 and even 2008.

Commercial Property Services (CPS) is a Licensed Florida Real Estate Broker appealing property taxes statewide. CPS Realtor Sheila Anderson participated, for years, during the VAB Rule making process – contributing to laws ensuring VABs are fair, ethical, and comply with State standards governing assessments.

For additional information, contact CPS Realtor Sheila Anderson at 305-372-9200 or 352-245-7441.

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SOURCE Commercial Property Services, Inc., Licensed Real Estate Broker