While the Fulton County Tax Assessor may or may not be pursuing unconventional valuation methods in growing the county’s property tax base, commercial property owners should be well aware of the possibility. Keep in mind that when the value of commercial property cannot keep pace with the county’s revenue needs, these methods will likely be applied.
Classification as Special Purpose
One of these unconventional methods is the incorrect classification of commercial property including manufacturing facilities as special purpose property. This means that that the property tax assessments will typically exceed the value resulting from the application of traditional market data.
Of course, special purpose property exists but the argument will usually fail in three ways. First, the assessor can erroneously assign limited market property in the special purpose property category. Second, the assessor can ignore available market information that can contribute to fair property valuation. Third, the assessor can value the wrong interest.
This is not to say that the Fulton County Tax Assessor is committing one or all of these mistakes. But if you have doubts, then you can look into the matter since the incorrect classification may be the reason behind the unfairly high property assessment.
According to the Dictionary of Real Estate Appraisal, a special purpose property is a limited market property built with special construction materials; with a unique architectural design; or with a layout restricting its use to the special purpose for which it was built.
By the definition, a special purpose property is a subset of limited market property. The two are not synonymous, a distinction that the commercial property owner should be aware of when disputing the assessment with the Fulton County Tax Assessor.
If necessary, an experienced tax consultant should be brought on board to determine whether the commercial property is a special purpose property or not.
Failure to Consider Market Data
Yet another way that the Fulton County Tax Assessor can give unfairly high property assessments is the refusal or the failure to consider market data, which can have a significant impact on the final assessment. Emphasis must be made that assessors typically use the argument that special purpose property should only be valued with the cost approach or that the income from business operations will be used for valuation purposes.
But these arguments are invalid considering that these are often in conflict with real-world reliable evidence. For example, market transactions should be considered even when it requires adjustments to account for the differences between the subject property and the comps.
Furthermore, considering taxpayer-specific income data should not be used in the valuation of special purpose property. For example, factoring in non-rental income from manufacturing facilities during property valuation can result in high value estimates; the income was earned from non-real estate components including intangibles, such as intellectual property, goodwill, and in-place work force.
Ultimately, when the Fulton County Tax Assessor increases its assessment by claiming that the subject property is a special purpose property, the owner should request evidence about the classification and valuation. The appeal will have a more solid footing because of such vigilance.
