With the enrollment of HB 430, Virginia has made some interesting and potentially significant changes to it’s property tax procedures. Some of the key changes are:

Affordable Housing:

the duly authorized real estate assessor shall consider:

1. The contract rent and the impact of applicable rent restrictions;

2. The actual operating expenses and expenditures and the impact of any such additional expenses or expenditures; and

3. Restrictions on the transfer of title or other restraints on alienation of the real property.

Assessment Information:

Upon request of any taxpayer or his duly authorized representative, the assessing officer of the governing body shall make available information regarding the methodology employed in the calculation of a property’s assessed value to include the capitalization rate used to determine the property’s value, a list of comparable properties or sales figures considered in the valuation, and any other market surveys, formulas, matrices, or other factors considered in determining the value of the property.

Appeal Board Qualifications:

On any board or panel thereof considering appeals of commercial or multi-family residential property in a locality with a population exceeding 100,000, 30 percent of the members of such board or panel shall be commercial or multi-family residential real estate appraisers who are licensed and certified by the Virginia Real Estate Appraiser Board

Assessment Increases:

In any case before the board concerning a taxpayer’s complaint in which the commissioner of the revenue or other local assessing officer requests the board to increase the assessment after the taxpayer files an appeal to the board on a commercial, multifamily residential, or industrial property, the commissioner or other officer shall provide the taxpayer notice of the request not less than 14 days prior to the hearing of the board. Except as provided herein, if the taxpayer contests the requested increase, the assessor shall either withdraw the request or shall provide the board an appraisal performed by an independent contractor who is licensed and certified by the Virginia Real Estate Appraiser Board

Head on over via the link above, print the bill or save the PDF and place it in your VA file. It’s bound to come in handy at some point.

The Virginia Attorney General has issued Opinion Number: 09-109 regarding the term ”original cost” as it relates to the assessment of tangible personal property. The opinion states that, “it is my opinion that the term ‘original cost’ means the acquisition cost of property from the manufacturer or dealer, i.e., the original cost paid by the original purchaser of such property from the manufacturer or dealer”.  The first thing to point out is that this is what personal property appraisers define as historical cost.

Now, let’s say that an individual or company acquires a business in the state of Virginia. The cost of the assets to the present owner (what personal property  appraisers define as original cost) will be the values that the will be carried on the company’s books for accounting purposes. This  could result in a “step-up” or a “step-down” in value and could be different than what the opinion defines as the ”original cost” of the assets.  How will the assets be valued for tax assessment purposes?

According to this opinion, the assets must still be valued using the “original cost” of the assets (trended & depreciated). An issue arises due to the fact that the taxpayer would now, theoretically,  need to maintain two sets of books (one for accounting and one for property tax reporting). Furthermore, what if the taxpayer does not have the “original cost” information (I have seen this happen many times)? Now, the taxpayer would have to accept the figures on the personal property return and make additions and deletions going forward.

I am just skimming the surface of this issue here, but hopefully you can see how this has the potential to result in innaccurate assessments of personal property assets in Virginia and elsewhere.