From Our Property Taxes
This approach asks: what did similar land and improvements cost during the tax year you are contesting? In other words, what would it cost to replace an item on the property, such as a new shingle roof or a new HVAC system. A simple formula is used to derive cost: add land value and improvement value and substract depreciation.
A. Vacant lot: if possible compare your lot to a similar vacant lot to determine cost; B. No vacant lot: if no vacant lot is available find a similar lot with a home on it. Subtract the home value from the total value to find a land value.
This approach requires you to value the home by its replacement cost. You must break down the components of your house and determine the cost to replace.
- Foundation and framing:
- Exterior (stone, brick, siding)
- Quality of roof (type of roofing, age and quality)
- Interior finish (hardwood floors; marble; high end fixtures; kitchen and bath)
After you have broken down your home into its various components then compare your breakdown with the breakdown performed by the assessor. It will be found on your property record card. Often times the values assigned by the assessor use figures furnished by the state taxing agency or outside valuation firm.
Next you must compare the depreciation table used by the assessor with the depreciation table used by larger city or regional banks. Keep in mind that assessors often under depreciate your property to inflate its value.
Most depreciation tables come from a national survey done by Marshall & Swift/ Boeckh LLP. However, those tables do not consider other factors that could diminish value (and hence increase depreciation).
The depreciation process requires that you take an honest look at your lot, your property, your basement and other improvements. Specifically:
- Lot: Are there access issues? Are there problems with soils compaction, erosion or flooding? These issues diminish your lots value.
- Building: What is the functionality of your HVAC system? Do you have adequate storage? Are there hazardous material issues?
- Basement/Crawl Space: Do you have flooding issues? Rot? Termites? Cracking foundation? Is your sump pump operational?
- Other: Do you have a pool or tennis court on your property? Are they in good shape or do they need repair?
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