Illinois recently enacted HB 4120 regarding the abatement of taxes for businesses that occupy a previously vacant property. The Act states:

“Upon a majority vote of its governing body, any taxing district  may, after the determination of the assessed valuation of its property, order the county clerk to abate any portion of its taxes on any property if (i) a new business first occupies a facility located on the property during the taxable year, and (ii) the facility was vacant for a period of at least 24 continuous months prior to being occupied by the business. The abatement shall not exceed a period of 2 years and the aggregate amount of abated taxes for all taxing districts combined shall not exceed $4,000,000.”

Given the amount of vacant property on the market, this should prove to be an effective tax savings tool for Illinois businesses.

The California State Board of Equalization recently released a draft of the proposed Guidelines for Substantiating Additional Obsolescence for Personal Property and Fixtures as part of a project to assist county assessors’ staff in identifying and quantifying obsolescence for personal property tax valuation.

Although the proposed guidelines do not offer anything that can be considered groundbreaking, they do serve as an overview of the process for identifying and calculating extraordinary obsolescence.

1^st installment tax bills in Cook County have historically been computed at 50% of the property taxes paid for the preceding year. With the passage of S.B. 2125, 1^st installment tax bills will be computed at 55% of the preceding year’s tax bills. Taxpayers in Cook County will want to accrue accordingly.

In the recent decision of Huang v. Department of Revenue The Oregon Tax Court denied a taxpayer’s request for a reduction in the property tax valuation of a motel due to the taxpayer’s failure to prove the valuation of intangible business property. 

The taxpayer purchased a motel and the sales agreement allocated a portion of the purchase price to “land and buildings” and a portion to “Trade Name and Goodwill”. The taxpayer sought to have the ”Trade Name and Goodwill”  portion excluded from the purchase price in order to arrive at the value for property tax purposes. The Tax Court found that: 

“Taxpayers’ actions and Huang’s testimony fail to provide an explanation for why the Sales Agreement allocated the sales price among ‘Land and Buildings’ and ‘Trade [N]ame and Goodwill’” 

In fact, the actions of the taxpayer both prior to the sale and subsequently seem to indicate the trade name had minimal, if any, value (they changed the name of the hotel after the sale) or that goodwill was properly valued (Haung testified that he did not know the manner in which the seller operated the business prior to the sale).

The MIT Center for Real Estate recently released its 2009 Q2 Transaction-Based Index indicating an 18.1% decline in commercial real estate sale prices compared to the 1^st quarter and, are you ready for this, a 39.2% decline from the peak in the 2^nd quarter of 2007. 

Some good news is that their summary analysis states: 

“The big news this quarter is not just the magnitude of the drop, but the fact that transaction volume actually increased in the presence of this decline, the first volume increase since last summer,” 

A pick up in transaction volume is a welcome sight to us property tax folks.