Terry Rubald - Nevada€¦ · completed project equals $500,000. The land had a full cash value of...

From: Terry RubaldTo: Allison Garton; Anna Thornley; Bob Carroll; Caron Machado; Cheryl Erskine; Cindy Creighton; Cori Burke; Dave

Dawley; David Denman; Dawn Buoncristiani; Dennis Gillot; Doug Scott; Doug Sonnemann; Gregg Carlson; JamesBrown; Jeff Payson; Jeffrey Mitchell; Jennifer Gaynor; Jim Jacobs; Jim Susa; John Sande IV; Josh Hicks; JudyChide; Lee Farris; Linda Jacobs; Mary Ann Weidener; Paul D. Bancroft; Rigo Lopez; Ronald Hammond; Ruth PLee; Sheree Stringer; Susan Dehnen; Tammi Davis; Tom Warden; Trent Tholen; Virginia Valentine; WilliamChuck Bailey

Subject: Remainder parcel abatement examples and other examplesDate: Tuesday, November 08, 2016 9:57:05 AMAttachments: 20161108 Excerpts from Guidelines re remainder parcels-actual & authorized use.doc

Abatement Examples.xls

Dear Interested Party: During the workshop held on November 1, 2016 regarding amending the regulationsgoverning the application of the “tax cap” abatement, particularly for remainder parcels, theDepartment requested examples to be provided for future workshops. The examplesshould be submitted to my attention by December 1st. In order to assist the discussion, I have attached excerpts from an unpublished manualdeveloped by the Department. The excerpts contain several examples which may behelpful to you. There are several types of examples in the excerpts, including examples ofchanges in actual and authorized use, remainder parcels, and qualified subdivisions,among others. Note that each example has a specific number. The actual and authorizeduse examples all start with “AAU” then a number, “01”. The remainder parcel examples allstart with “RP”. The subdivision examples all start with “SUB”. As you read through each example narrative, you will see a spreadsheet included in thenarrative. The matching spreadsheet in excel format for interactive use will have the sameexample number. For example, RP12A on page 46 will also be found in the Excelworkbook under Tab RP12A. Please feel free to send comments on these examples in lieu of, or in addition to, providingyour own examples. Thank you for participating in these workshops. Terry Terry E. RubaldDeputy Executive DirectorDepartment of Taxation1550 College ParkwayCarson City, NV 89701(775) 684-2095This message and attachments are intended only for the addressee(s) and may contain information that is privileged and confidential. Ifthe reader of the message is not the intended recipient or an authorized representative of the intended recipient, I did not intend to waiveand do not waive any privileges or the confidentiality of the messages and attachments, and you are hereby notified that anydissemination of this communication is strictly prohibited.

12-22-2016 Workshop, Page 1
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ACTUAL & AUTHORIZED USE WORKSHEET

R109-08:19

ADOPTED METHOD

ROOP

1.159274

: MAXIMUM GROWTH FACTOR

EXAMPLE AAU01

0.035700

: OVERLAPPING COMBINED TAX RATE

5,112.95

$

: PRIOR YEAR TAXES AFTER ABATEMENT ON GROSS ASSESSED VALUE

-

$

: ESTIMATED TAXES ATTRIBUTABLE TO CHANGE

14.9%

: ACTUAL ANNUAL GROWTH RATE

FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

200,000

200,000

-

-

BASE YEAR

2004-05

100,000

100,000

-

-

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

70,000

70,000

-

-

-

BASE YEAR

2004-05

35,000

35,000

-

-

-

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

70,000

-

70,000

-

70,000

IMPROVEMENTS

73,500

70,000

143,500

-

143,500

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

143,500

70,000

213,500

-

213,500

CAPPED TAXES ON

EXISTING ASSESSED VALUE

NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

5,266.34

5,122.95

2,499.00

-

7,621.95

-

7,621.95

REMAINDER PARCEL WORKSHEET

NAC 361.61036-38

EXAMPLE RP02B

8.0%

: ABATEMENT PERCENTAGE

0.035700


PRIOR YEAR

TOTALS

APN 001

ACRES

2,560.00

2,560.00

GROSS TAXABLE VALUE

256,000

256,000

GROSS ASSESS VALUE

89,600

89,600

-

NET TAXES DUE

3,198.72

3,198.72

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

REMAINDER APN 002

1,920.00

1,920.00

REMAINDER APN 003

640.00

640.00

-

-

TOTALS

2,560.00

2,560.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

REMAINDER APN 002

75.0%

75.0%

REMAINDER APN 003

25.0%

25.0%

-

0.0%

0.0%

-

0.0%

0.0%

TOTALS

100.0%

100.0%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

REMAINDER APN 002

67,200

67,200

REMAINDER APN 003

22,400

22,400

-

-

-

-

TOTALS

89,600

89,600

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION

REMAINDER APN 002

2,399.04

2,399.04

-

-

-

REMAINDER APN 003

799.68

799.68

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

3,198.72

3,198.72

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 002

67,200

-

2,399.04

2,590.96

1.08

REMAINDER APN 003

174,631

49,369

799.68

863.65

1.08

-

-

-

-

-

-

TOTALS

241,831

49,369

3,198.72

3,454.61

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

REMAINDER APN 002

2,399.04

-

-

2,399.04

-

2,399.04

REMAINDER APN 003

6,234.33

1,762.47

-

7,996.80

(5,370.68)

2,626.12

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

8,633.37

1,762.47

-

10,395.84

(5,370.68)

5,025.16


NAC 361.61036-38

EXAMPLE RP01

8.0%


0.035700


PRIOR YEAR

TOTALS

APN 001

ACRES

15.00

15.00

GROSS TAXABLE VALUE

150,000

150,000

GROSS ASSESS VALUE

52,500

52,500

-

NET TAXES DUE

1,874.25

1,874.25

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

REMAINDER APN 002

5.00

5.00

REMAINDER APN 003

5.00

5.00

REMAINDER APN 004

5.00

5.00

-

TOTALS

15.00

15.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

REMAINDER APN 002

33.3%

33.3%

REMAINDER APN 003

33.3%

33.3%

REMAINDER APN 004

33.3%

33.3%

-

0.0%

0.0%

TOTALS

100%

100%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

REMAINDER APN 002

17,500

17,500

REMAINDER APN 003

17,500

17,500

REMAINDER APN 004

17,500

17,500

-

-

-

TOTALS

52,500

52,500

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

REMAINDER APN 002

624.75

624.75

REMAINDER APN 003

624.75

624.75

REMAINDER APN 004

624.75

624.75

-

-

-

TOTALS

1,874.25

1,874.25

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 002

21,875

624.75

674.73

1.08

REMAINDER APN 003

21,875

624.75

674.73

1.08

REMAINDER APN 004

21,875

624.75

674.73

1.08

-

-

-

1.08

TOTALS

65,625

-

1,874.25

2,024.19

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

REMAINDER APN 002

780.94

-

-

780.94

(106.21)

674.73

REMAINDER APN 003

780.94

-

-

780.94

(106.21)

674.73

REMAINDER APN 004

780.94

-

-

780.94

(106.21)

674.73

-

-

-

-

-

-

-

TOTALS

2,342.82

-

-

2,342.82

(318.63)

2,024.19

Excerpts from Department of Taxation Abatement Guidelines, January 2010

THE TAX ABATEMENT CALCULATION MODEL

Before AB489, calculating property taxes followed a simple model that appraisers often call IRV (Income = Rate * Value). Assessors determined the taxable value of all property under their jurisdiction according to NRS 361.227 and applied the 35% assessment ratio pursuant to NRS 361.225 to calculate its assessed value. Taxes due thus equaled total assessed value (gross assessed – exemptions) times levied tax rate.

Correct tax computation under AB489, however, requires splitting value into several components: Existing Value, New Value, Exempt Value, and under certain circumstances, Recapture Value. Because some portion of the combined overlapping ad valorem tax rate may be exempt from abatement, different tax rates may apply to each value component. See NRS 361.4726 -.4728

The actual taxes due now equal the Taxes Otherwise Due Prior to Application of the Abatement (TODPAA) less the tax abatement, if any. In simple terms, the new tax computation model looks like this:

· TODPAA = (Existing AV * Combined Tax Rate) + (Existing AV * Cap-Exempt Tax Rate) + (New AV * Total [Combined + Cap-Exempt] Tax Rate) + (Recapture AV * Recapture Tax Rate + Recapture Carry Forward) – (Exempt AV * Total Tax Rate)

· Nominal Tax = (Existing AV * Combined Tax Rate)

· Capped Tax = [(Prior Year Gross (Existing + New) AV * Prior Year Combined Tax Rate – Prior Year Abatement] * Current Year Tax Cap Factor

· If Nominal Tax > Capped Tax Then

Tax Abatement = Nominal Tax – Capped Tax Else

Tax Abatement = 0

· Taxes Due = TODPAA – Tax Abatement

The definitions for the combined overlapping and cap-exempt tax rates appear in NRS 361.4715. The definitions of recapture assessed value and recapture carry-forward appear in NRS 361.4725. Although not defined explicitly, the Department equates the recapture tax rate with the abatement tax rate [(Nominal Tax - Capped Tax) / Existing AV].

For parcels without complications like recapture assessed value, exempt assessed value, or cap-exempt tax rates, the capped tax (maximum tax on property separately assessed in the prior year) simply equals last year’s taxes due times the current year tax cap factor. Any increase in the assessed valuation of the property from the immediately preceding year as a result of any improvement to or change in the actual or authorized use of the property counts as new assessed value not subject to abatement.

The tax cap factor itself equals 1.030 (3.0% maximum tax increase) for qualified residential property. The general abatement for all other property falls into a range between twice the CPI growth for all items, all US cities from the prior year to the current year and 8.0%, 8% being the maximum amount of tax increase. Historically, the range for tax cap factors has fluctuated between 1.002 (.2% maximum tax increase) and 1.080 (8.0% maximum tax increase). Counties whose nine-year moving average total assessed value growth falls between the floor and ceiling tax cap factors receive a factor equal to their own assessed value growth rate. See NRS 361.4722

EXAMPLE AAU01: IMPROVEMENTS TO PROPERTY

A homeowner converts his existing double garage into a master suite, adds a second floor family room, and erects a new attached double garage. RCN for the 20 year-old improvements prior to remodeling equals $350,000, RCN for the additions equals $200,000, and RCN for the completed project equals $500,000. The land had a full cash value of $100,000 in 2004-05 that increased to $200,000 for 2009-10.

Because RCN for the new improvements ($200,000) exceeds 10% of total RCN after remodeling ($500,000), the assessor must recalculate the adjusted actual age.

NRS 361.229 Adjustment of actual age of improvements in computation of depreciation.

1. The actual age of each improvement made on a parcel of land must be adjusted, for the purpose of computing depreciation, when any addition is made or replacement is made whose cost, added to the cost of any prior replacements, is at least 10 percent of the cost of replacement of the improvement after the work is done. For the purposes of this section, “replacement” does not include changing or adding finish or covering to floors or walls, changing or adding small appliances, or other normal maintenance of the improvement in a good condition.

2. Except as otherwise provided in subsection 3, the amount of the reduction must be the product of the prior actual age multiplied by the ratio of the cost of the replacement or addition to the cost of replacement of the improvement after the work is done.

3. The amount of the reduction for additions which increase the floor area of the improvement may be calculated by multiplying the prior actual age of the improvement by the ratio of the number of square feet of additional floor area to the total number of square feet of the improvement including the addition.

In this case, adjusted actual age equals [20 - (20 * 200,000 / 500,000)] = [20 * (1 - 200,000 / 500,000) = 12 years], so depreciation equals [12 * 1.5% = 18.0% * $500,000 = $90,000].

Existing value inside the tax cap thus equals [$410,000 = ($200,000 land + $300,000 improvements - $90,000 depreciation)] and new improvement value outside the tax cap equals $200,000.

Observe that depreciation applies only to existing value. For complex properties with several improvements built in different years, the assessor may wish to calculate adjusted actual age, existing value, depreciation, and new value for each improvement separately.

Also observe that the incremental value and taxes attributable to the change in the actual or authorized use of the property shown on the form apply only to incremental new land.


NAC 361.61036-38

EXAMPLE RP14

8.0%


0.035700


PRIOR YEAR

TOTALS

APN 004

ACRES

5.00

5.00

GROSS TAXABLE VALUE

1,916,640

1,916,640

GROSS ASSESS VALUE

670,824

670,824

-

NET TAXES DUE

23,948.42

23,948.42

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 004

REMAINDER APN 005

4.00

4.00

REMAINDER APN 006

1.00

1.00

-

-

TOTALS

5.00

5.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 004

REMAINDER APN 005

80.0%

80.0%

REMAINDER APN 006

20.0%

20.0%

-

0.0%

-

0.0%

TOTALS

100%

100%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 004

REMAINDER APN 005

536,659

536,659

REMAINDER APN 006

134,165

134,165

-

-

-

-

-

-

TOTALS

670,824

670,824

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 004

REMAINDER APN 005

19,158.73

19,158.73

REMAINDER APN 006

4,789.69

4,789.69

-

-

-

-

-

-

TOTALS

23,948.42

23,948.42

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 005

484,372

-

19,158.73

20,691.43

1.08

REMAINDER APN 006

-

730,821

4,789.69

5,172.87

1.08

-

-

-

-

-

-

-

-

TOTALS

484,372

730,821

23,948.42

25,864.30

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

REMAINDER APN 005

17,292.08

-

-

17,292.08

-

17,292.08

REMAINDER APN 006

-

26,090.31

-

26,090.31

-

26,090.31

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

17,292.08

26,090.31

-

43,382.39

-

43,382.39

EXAMPLE AAU02: CHANGE OF ACTUAL USE

A development company purchases a vacant 20,000 square foot commercial lot (LUC 14) and constructs a new office building with an RCN of $1.0 million. Comparable sales analysis reveals that vacant commercial land in this market sold for $10.00 a square foot in the base year 2006-07 and $20.00 a square foot in 2008-09. Additionally, residual land capitalization confirms that improved commercial land commands a 20% premium above vacant.

Because the parcel has changed actual use from vacant to improved commercial (LUC 40) the assessor must determine how much incremental value counts as new land. Of course, the new construction counts as an improvement to the property not subject to abatement.

As vacant land the parcel had a full cash value of $400,000; the conversion to improved land added $80,000 in incremental land value. Determining how much incremental value counts as new land, however, requires use of the NAC 361.610485 Actual & Authorized Use Worksheet.

Here the value attributable to the change in actual use equals the incremental value in the base year ($40,000) times the growth factor from 2006-07 through 2009-10 (1.259712 = 1.00 * 1.08 * 1.08 * 1.08) or $50,388. The rule attributes the remaining $29,612 increase in current land value subject to abatement to the operation of impersonal market forces.


R109-08:19

ADOPTED METHOD

ROOP

1.259712


EXAMPLE AAU02

0.035700


4,373.35

$


629.61

$


26.0%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

480,000

400,000

80,000

80,000

BASE YEAR

2006-07

240,000

200,000

40,000

50,388

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

168,000

140,000

28,000

28,000

999.60

BASE YEAR

2006-07

84,000

70,000

14,000

17,636

629.61

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

150,364

17,636

168,000

-

168,000

IMPROVEMENTS

-

350,000

350,000

-

350,000

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

150,364

367,636

518,000

-

518,000

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

4,723.22

5,367.99

13,124.61

-

18,492.60

(644.77)

17,847.83

EXAMPLE AAU03: CHANGE OF AUTHORIZED USE

The Bureau of Land Management (BLM) sold an existing 40 acre parcel of tax-exempt range land (LUC 19) at a public, reserve price auction to a commercial developer for $200,000 in May, 2007. In September 2007, the developer applied for and received a zoning change from open zoning, which authorized mixed residential, commercial, and light industrial uses, to general commercial (LUC 14) as well as a special use permit to develop a regional shopping mall complex.

Before the sale, the assessor valued BLM range land at a token value of $1.25/acre assessed. Because the assessor felt that BLM auctions accurately represent the full cash value of raw land, he increased the value after the sale to $5,000/acre ($1750/acre assessed), which produced an incremental land value of $199,857. Prior to the base year 2004-05, similar parcels of BLM land sold at auction for $2500/acre. In fiscal 2007-08, comparable vacant commercial parcels sold for roughly $5,500/acre.

Assuming that local zoning laws did not authorize development of large shopping complexes without a special use permit, the land changed authorized use twice: from tax exempt public range land to generic vacant raw land with open zoning, and from raw land to vacant commercial with special use permit after rezoning. The timing of the transactions also affects the outcome. The original BLM sale occurred before the 2008-09 sales cutoff date (June 30, 2007) while the comparable sales for BLM and commercial land apply to fiscal 2004-05 and 2009-10 respectively. Also observe that the first use change applies to fiscal 2008-09 and the second use change applies to fiscal 2009-10.

How the assessor interprets the concept of combination of applications and approvals may also affect the outcome of this event. For example, if final approval includes a building permit, the second change of use might not occur until construction actually begins. In this case, the zoning change with special use permit produced no increase in land value. Because developers may easily obtain zoning changes with special use permits at low cost, the assessor determined that market demand caused the $500/acre increase in value from 2008-09 to 2009-10. The incremental value between 2008-09 and 2009-10 thus falls under the tax cap.


R109-08:19

ADOPTED METHOD

ROOP

1.360489


EXAMPLE AAU03

0.035700


1.79

$


1,697.50

$


19.0%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2008-09

200,000

143

199,857

199,857

BASE YEAR

2004-05

100,000

143

99,857

135,854

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2008-09

70,000

50

69,950

69,950

2,497.22

BASE YEAR

2004-05

35,000

50

34,950

47,549

1,697.50

FISCAL YEAR 2008-09

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

22,451

47,549

70,000

-

70,000

IMPROVEMENTS

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

22,451

47,549

70,000

-

70,000

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

1.93

801.50

1,697.50

-

2,499.00

(799.57)

1,699.43


R109-08:19

ADOPTED METHOD

ROOP

1.080000


EXAMPLE AAU03B

0.035700


1,699.43

$


249.90

$


0.0%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

220,000

200,000

20,000

20,000

BASE YEAR

2008-09

220,000

200,000

20,000

21,600

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

77,000

70,000

7,000

7,000

249.90

BASE YEAR

2008-09

77,000

70,000

7,000

7,560

269.89

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

70,000

7,000

77,000

-

77,000

IMPROVEMENTS

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

70,000

7,000

77,000

-

77,000

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

1,835.38

2,499.00

249.90

-

2,748.90

(663.62)

2,085.28


The owner of a residence with 100 feet of lake frontage applied for and obtained a pier permit from the Department of the Interior and built a new pier whose RCN equaled $100,000. Comparable sales demonstrated that buildable residential sites with 90-125 feet of lake frontage sold for $50,000/front foot in the base year 2004-05 and for $70,000/front foot in the current year. Comparable sales also revealed that a pier permit added a premium of $8,000/front foot in 2004-05 and that the premium has remained constant to the present. RCNLD for the existing 55 year-old home and other improvements equaled $1.5 million.

In this case, a change of governmental restrictions that resulted from the application for and approval of a permit authorized construction of a pier--a rare, highly desirable appurtenance in this market. Because the multiplicative incremental change from the base year to the present exceeds the value added in the current year, the new value attributable to the change of authorized use equals $800,000. Naturally, RCN for the pier itself counts as an improvement to the property outside the tax cap.


R109-08:19

ADOPTED METHOD

ROOP

1.159274


EXAMPLE AAU04

0.035700


106,207.50

$


9,996.00

$


6.2%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

7,800,000

7,000,000

800,000

800,000

BASE YEAR

2004-05

5,800,000

5,000,000

800,000

927,419

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

2,730,000

2,450,000

280,000

280,000

9,996.00

BASE YEAR

2004-05

2,030,000

1,750,000

280,000

324,597

11,588.11

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

2,450,000

280,000

2,730,000

-

2,730,000

IMPROVEMENTS

525,000

35,000

560,000

-

560,000

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

2,975,000

315,000

3,290,000

-

3,290,000

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE ON

GROSS ASSESSED

VALUE

109,393.73

106,207.50

11,245.50

-

117,453.00

-

117,453.00

EXAMPLE AAU05: SITE REMEDIATION

A 5 acre parcel (LUC 10) in a developing rural area suffered from a topographic detriment: a deep wash that rendered the parcel 50% unusable. The assessor valued comparable parcels without detriments at $300,000/acre in the base year 2004-05 and at $640,000/acre in 2009-10. After applying the 50% topography discount, the assessor valued the subject parcel at $750,000 in the base year and $1,560,000 in the current (and prior) year.

Sometime after the 2008-09 lien date the owner renovated the site with earthwork and flood control improvements that cost $300,000 and rendered the parcel 100% usable. Accordingly, the assessor removed the 50% wash discount to make the subject comparable to other unimpaired properties in the area.

Although the existing abatement regulations makes no provision for curing functional obsolescence, one may apply the technique described in NAC 361.610485 to isolate new value not subject to abatement. Although appraisal theory generally treats site improvements as land value, an assessor could figure the cost for grading, hauling, backfill, flood control devices, etc as new construction (improvements to property) and the difference between the cost of the site improvements and the full cash value of the remediated land as incremental land value, a portion of which might fall outside the tax cap.

Notice the difference in abatements between Example AAU05A, which treats the entire incremental value as land only, and Example AAU05B, which splits the incremental value between improvements to property and new land value due to a change of authorized use (unbuildable land [LUC 17] now buildable [LUC 10]). Incidentally, Marshall Swift current cost multipliers suggested that similar site improvements would have cost $250,000 in the base year.


R109-08:19

ADOPTED METHOD

ROOP

1.469328


EXAMPLE AAU05A

0.035700


19,492.00

$


13,769.45

$


15.8%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

3,120,000

1,560,000

1,560,000

1,560,000

BASE YEAR

2004-05

1,500,000

750,000

750,000

1,101,996

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

1,092,000

546,000

546,000

546,000

19,492.20

BASE YEAR

2004-05

525,000

262,500

262,500

385,699

13,769.45

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

706,301

385,699

1,092,000

-

1,092,000

IMPROVEMENTS

-

-

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

706,301

385,699

1,092,000

-

1,092,000

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE ON

GROSS ASSESSED

VALUE

21,051.36

25,214.95

13,769.45

-

38,984.40

(4,163.59)

34,820.81


R109-08:19

ADOPTED METHOD

ROOP

1.469328


EXAMPLE AAU05B

0.035700


19,492.20

$


9,179.61

$


17.7%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

2,820,000

1,560,000

1,260,000

1,260,000

BASE YEAR

2004-05

1,250,000

750,000

500,000

734,664

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

987,000

546,000

441,000

441,000

15,743.70

BASE YEAR

2004-05

437,500

262,500

175,000

257,132

9,179.61

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

729,868

257,132

987,000

-

987,000

IMPROVEMENTS

-

105,000

105,000

-

105,000

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

729,868

362,132

1,092,000

-

1,092,000

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

21,051.58

26,056.29

12,928.11

-

38,984.40

(5,004.71)

33,979.69


A one acre lot in a tax district zoned for high-rise hotel casinos (H1 zoning, LUC 42) contained a 75 year-old residence. Pursuant to NRS 361.227(1)(a)(2), the assessor valued the parcel at its actual use as an improved residential site (LUC 20) whose full cash value equaled $200,000 in the base year and now equals $400,000. Comparable sales of nearby vacant H1 land indicated a current value of $28.00/sq ft and a base year value of $8.00/sq ft for similar parcels.

Local zoning ordinances allow improved property to remain in service whenever changes in the uses to which land may lawfully be put convert the actual use of the property from authorized to unauthorized. After removing the existing improvements, however, the owner may only develop the parcel to an authorized use.

Accordingly, once the owner demolished the home and cleared the site, the assessor valued the land at its authorized use as vacant (H1 zoning, LUC 14) with current and base year full cash values equal to $1,207,472 and $348,480 respectively.


R109-08:19

ADOPTED METHOD

ROOP

1.469328


EXAMPLE AAU06

0.035700


4,998.00

$


2,725.98

$


28.3%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

1,207,472

400,000

807,472

807,472

BASE YEAR

2004-05

348,480

200,000

148,480

218,166

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

422,615

140,000

282,615

282,615

10,089.36

BASE YEAR

2004-05

121,968

70,000

51,968

76,358

2,725.98

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

346,257

76,358

422,615

-

422,615

IMPROVEMENTS

-

-

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

346,257

76,358

422,615

-

422,615

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

5,397.84

12,361.37

2,725.98

-

15,087.35

(6,963.53)

8,123.82


A two acre parcel zoned for residential estates (RE zoning, LUC 12) sits in a corridor approved for commercial development by a local government master-plan. Comparable sales confirm that full cash value for vacant land within the master-plan area currently equals $28.75/sq ft regardless of its authorized use (actual zoning). The owner applies for and receives a zoning change to general commercial (C1 zoning, LUC 14).

In this example the change of authorized use produces no change in full cash value. Consequently, the total property value counts as existing value subject to abatement with no incremental value outside the cap.


R109-08:19

ADOPTED METHOD

ROOP

1.469328


EXAMPLE AAU70A

0.035700


31,296.23

$


-

$


29.2%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

2,504,700

2,504,700

-

-

BASE YEAR

2004-05

696,960

696,960

-

-

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

876,645

876,645

-

-

-

BASE YEAR

2004-05

243,936

243,936

-

-

-

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

876,645

-

876,645

-

876,645

IMPROVEMENTS

-

-

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

876,645

-

876,645

-

876,645

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

33,799.93

31,296.23

-

-

31,296.23

-

31,296.23

An identical two acre parcel zoned for residential estates (RE zoning, LUC 12) sits in another corridor approved for commercial development by a local government master-plan. Comparable sales confirm that inclusion within the master-plan area produces no increase in full cash value; the market prices land according to its authorized use (actual zoning).

Current full cash value for lots zoned RE equals $200,000/acre while full cash value for vacant land zoned commercial (C1 zoning, LUC 14) within the master-plan area currently equals $28.75/sq ft. The owner applies for and receives a zoning change to general commercial.

In this example, the change of authorized use produces incremental full cash value not subject to abatement. Consequently, the assessor should apply NAC 361.610485 to split the total value between existing and new. Obviously, land owners should carefully consider the timing and tax consequences of their actions before applying for zoning changes. Nothing in the plain language of the abatement statutes suggests that the Legislature intended to remove the risks inherent in real estate speculation from the marketplace.


R109-08:19

ADOPTED METHOD

ROOP

1.469328


EXAMPLE AAU07B

0.035700


4,998.00

$


9,123.81

$


29.2%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

2,504,700

400,000

2,104,700

2,104,700

BASE YEAR

2004-05

696,960

200,000

496,960

730,197

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

876,645

140,000

736,645

736,645

26,298.23

BASE YEAR

2004-05

243,936

70,000

173,936

255,569

9,123.81

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

621,076

255,569

876,645

-

876,645

IMPROVEMENTS

-

-

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

621,076

255,569

876,645

-

876,645

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

5,397.84

22,172.41

9,123.81

-

31,296.22

(16,774.57)

14,521.65


A 50 year-old motel (LUC 41) sits on a 1.01 site zoned for high-rise hotel casinos (H1 zoning, LUC 42). The assessor valued the land at its actual use for $50,000 per room, which yielded a total taxable value of $1,250,000 or $28.41/sq ft. Similar vacant parcels to the north and south of the subject zoned H1 currently have a full cash value of $307.50/sq ft.

The owner demolished the motel and cleared the site but exerted no effort to obtain a zoning variance to build a similar low-rise motel. Due to the change of actual use, the assessor valued the land at its authorized use as vacant (H1 zoning, LUC 42) for a total taxable value of $13,528,647 (43,996 sq ft * $307.50); $5,947,245 of the incremental land value falls outside the tax cap.


R109-08:19

ADOPTED METHOD

ROOP

1.469328


EXAMPLE AAU08

0.035700


15,618.75

$


74,310.80

$


25.2%


FISCAL YEAR

TAXABLE VALUE AFTER

CHANGE

TAXABLE VALUE

BEFORE CHANGE

INCREMENTAL TAXABLE

VALUE

CURRENT YEAR NEW

TAXABLE VALUE

CURRENT YEAR

2009-10

13,528,547

1,250,000

12,278,547

12,278,547

BASE YEAR

2004-05

4,399,560

351,965

4,047,595

5,947,245

FISCAL YEAR

GROSS ASSESSED

VALUE AFTER CHANGE

GROSS ASSESSED

VALUE BEFORE CHANGE

INCREMENTAL

ASSESSED VALUE

CURRENT YEAR NEW

ASSESSED VALUE

TAXES ATTRIBUTABLE

TO CHANGE

CURRENT YEAR

2009-10

4,734,991

437,500

4,297,491

4,297,491

153,420.43

BASE YEAR

2004-05

1,539,846

123,188

1,416,658

2,081,535

74,310.80

FISCAL YEAR 2009-10

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

GROSS ASSESSED

VALUE

EXEMPTIONS

TOTAL ASSESSED

VALUE

LAND

2,653,456

2,081,535

4,734,991

-

4,734,991

IMPROVEMENTS

-

-

-

-

-

PERSONAL PROPERTY

-

-

-

-

-

TOTAL

2,653,456

2,081,535

4,734,991

-

4,734,991

CAPPED TAXES ON


NOMINAL TAXES ON

EXISTING ASSESSED

VALUE

TAXES ON NEW

ASSESSED VALUE

TAX EXEMPTIONS

TAXES DUE PRIOR TO

APPLICATION OF

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

16,868.25

94,728.38

74,310.80

-

169,039.18

(77,860.13)

91,179.05


NAC 361.61036-38

EXAMPLE RP02A

8.0%


0.035700


PRIOR YEAR

TOTALS

APN 001

ACRES

2,560.00

2,560.00

GROSS TAXABLE VALUE

256,000

256,000

GROSS ASSESS VALUE

89,600

89,600

-

NET TAXES DUE

3,198.72

3,198.72

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

REMAINDER APN 002

1,920.00

1,920.00

NEW APN 003

640.00

640.00

-

-

TOTALS

2,560.00

2,560.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

REMAINDER APN 002

75.0%

75.0%

NEW APN 003

25.0%

25.0%

-

0.0%

0.0%

-

0.0%

0.0%

TOTALS

100%

100%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

REMAINDER APN 002

67,200

67,200

NEW APN 003

22,400

22,400

-

-

-

-

-

-

TOTALS

89,600

89,600

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

REMAINDER APN 002

2,399.04

2,399.04

NEW APN 003

799.68

799.68

-

-

-

-

-

-

TOTALS

3,198.72

3,198.72

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 002

67,200

-

2,399.04

2,590.96

1.08

NEW APN 003

-

224,000

799.68

863.65

1.08

-

-

-

-

-

-

TOTALS

67,200

224,000

3,198.72

3,454.61

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

REMAINDER APN 002

2,399.04

-

-

2,399.04

-

2,399.04

NEW APN 003

-

7,996.80

-

7,996.80

-

7,996.80

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

2,399.04

7,996.80

-

10,395.84

-

10,395.84

EXAMPLE AAU09: CHANGE OF ALLOWED USE

Two identical sections of land sit on opposite sides of a State road. Until recently, the south section had residential zoning that only allowed development of single family residences and manufactured homesites--with special use permits required for multiple residences, residential subdivisions, or manufactured home parks. The north section had open zoning that allowed a mix of residential, commercial, and light industrial development--with special use permits required for large truck plazas and heavy industrial operations.

The County Planning Commission just adopted a new master plan that creates a commercial corridor 1/4 mile deep on both sides of the State road and restricts development to areas behind the corridor with no highway frontage to residential use only. The same special use requirements apply to land zoned commercial or residential, but resort hotels in the commercial zones must also obtain special use permits. In general, special use permits require developers to provide basic infrastructure--particularly water systems and sewers. Existing property whose actual use is no longer authorized is allowed to remain in service, but may not be rebuilt at an unauthorized use even if destroyed by fire or natural disaster. Current ordinances make no provision for zoning variances.

In this case, the change of authorized use for valuation purposes differs from the change of authorized use for calculating new land value not subject to abatement. Although the change in uses to which land may lawfully be put changes the authorized use of residential land in the commercial corridor on both sides of the State road for valuation pursuant to NRS 361.227(1)(a)(1), only the south side of the road experiences a change of authorized use for calculating abatements. The zoning change to the commercial corridor on the north side does not add a new allowed use; zoning on the south side removes residential but adds commercial as a new allowed use, thus qualifying as a change of authorized use for determining new land value outside the tax cap.

Residential land south of the State road beyond the commercial corridor remains residential and experiences no change of authorized use for either valuation or abatements.

Commercial land on the north side of the State road in the new residential zone undergoes a change of authorized use for valuation, but not for determining abatements. Although the master plan has disallowed commercial use, it added no new allowed (authorized?) uses. Of course, the assessor must still value improved land on both sides of the State road at its actual use pursuant to NRS 361.227(1)(a)(2) regardless of zoning or any changes in authorized use.

In this case, only vacant land previously valued as residential in the south commercial corridor could accrue any incremental new land value outside the tax cap. The assessor must prove with verifiable market data that any increase in value results solely from zoning changes, a difficult task if no recent sales of commercial highway frontage have occurred in close proximity to the subject parcels.

REMAINDER PARCELS

Under the parceling system authorized by NRS 361.189, assessors assign each parcel of real property a unique assessor’s parcel number (APN). Although the APN (typically book--page-- parcel), does not constitute a correct and complete legal description of the land, it does allow assessors to create assessment rolls or map and locate property based on a uniform parcel identification system.

Whenever a parcel split (subdivision or cut), boundary adjustment, or combination (assemblage) occurs, the assessor retires the existing APN(s). With a parcel split or adjustment, both the newly created parcel(s) and the remnant parcel(s) receive new parcel numbers equal to the next highest available parcel number(s). After combining two or more parcels, the newly assembled appraisal unit also receives a new APN. Once assigned to a particular parcel an APN may never appear again, either for the remnant after a parcel split or for another new parcel. See also definition of “new parcel” at NAC 361.61014.

NRS 361.4722(1) states that the property tax abatement applies to all properties for which an assessed value was separately established for the immediately preceding fiscal year. When a split or combination occurs and a new APN is assigned, the newly configured parcel did not exist in its current form in the prior year. Thus, without further reading the abatement statute, one might assume that all newly split or combined parcels would then be exempt from the abatement, and the value of the newly configured parcel(s) would be treated as new value not subject to abatement in the current year. The Legislature, however, created the remainder exception. See NRS 361.4722(2) and (6).

NRS 361.4722(6) defines a remainder parcel as

a parcel of real property which remains after the creation of new parcels of real property for development from one or more existing parcels of real property, if the use of that remaining parcel has not changed from the immediately preceding fiscal year.

The exception allows the abatement to continue to be applied to vacant tracts which remain after carving out new parcels of land for development. Otherwise, the remainder would count as new property not subject to abatement each time an owner subdivided an existing parcel into new parcels. Accordingly, parcels of real property that remain after creating new parcels of real property for development from one or more existing parcels may still qualify for abatement even though the remnant parcel in its current form (APN) received no assessed valuation in the preceding fiscal year.

The definition of a remainder parcel in NRS 361.4722(6) contains an additional qualifier. In order to be considered a remainder parcel, the “use” of the parcel must not have changed from the prior year. If the use has changed, the property is considered a new parcel for development and is not subject to abatement. See also NAC 361.61016 and 361.61034(3)(a) and (b). Thus, for purposes of determining whether a newly created parcel is subject to abatement as a remainder parcel, NAC 361.61034 requires that each new parcel be separately evaluated to determine whether any change in use has occurred. “Use” for purposes of determining application of the abatement to a remainder parcel is defined separately from “use” for purposes of determining whether a change in actual or authorized use has occurred; or from the land use classification system used for categorizing properties for purposes of general appraisal and assessment. See Appendix A for a comparison.

NAC 361.61034(4) defines “use” for purposes of determining whether a remainder parcel has been created:

As used in this section, “use of the property” means the principal use of the property for one of the following purposes:

(a) Agricultural use; (defined in NAC 361.61006)

(b) Open-space use; (defined in NAC 361.61018)

(c) Residential use; (defined in NAC 361.61028)

(d) Commercial or industrial use; (defined in NAC 361.61008)

(e) Institutional use; (defined in NAC 361.61012)

(f) Recreational use; or (defined in NAC 361.61024)

(g) Use as vacant land held for development. (NAC 361.6103)

Assessors must analyze “use” for remainder purposes carefully. For instance, agricultural and open-space land must qualify for deferment and may or may not include improvements on land. Institutional and recreational uses seem vague, however. They might include both non-exempt private property and private or government tax-exempt property. Although institutional use sounds like exempt property, the regulation does not actually say so. For the most part they both sound like improved land.

NAC 361.61012 “Institutional use” defined. (NRS 360.090, 361.4722) “Institutional use” means any civic, charitable or religious use, including, without limitation, use as a church, cemetery or hospital.

NAC 361.61024 “Recreational use” defined. (NRS 360.090, 361.4722) “Recreational use” means any active or passive recreational use, including, without limitation, use as a trail, park, community garden, playground or athletic field.

Commercial or industrial use acts as the default for property that does not fit any other classification. For instance, vacant land once held for another use besides agricultural, open-space or held for development, also counts as a commercial use regardless of its authorized use (zoning). Does tax-exempt government range land qualify as vacant land held for development or as an institutional or recreational use? For instance, if one treats raw BLM land as an institutional or recreational use then new parcels of public land converted to private use by land grant or auction would count as a commercial use, not as vacant land held for development.

NAC 361.61008 “Commercial or industrial use” defined. (NRS 360.090, 361.4722) “Commercial or industrial use” means any use:

1. Conducted primarily for profit, except for any agricultural use, open-space use, residential use, institutional use, recreational use or use as vacant land held for development; and

2. Any other use that does not constitute any agricultural use, open-space use, residential use, institutional use, recreational use or use as vacant land held for development.

Residential use also can be difficult to determine. Vacant parcels with a final subdivision map count as a residential use instead of vacant land held for development, but depending on their remainder use before re-parceling, isolated new parcels outside of mapped subdivisions might count as vacant land held for development or as commercial use regardless of their authorized use.

NAC 361.61028 “Residential use” defined. (NRS 360.090, 361.4722) “Residential use” means use as a dwelling or for personal, family or household purposes, whether rented to particular persons or not, including, without limitation, use as a single-family detached housing unit, townhouse, condominium unit, mobile home or multifamily unit. The term includes the use of lots in a residential subdivision for which a final map has been recorded and on which residential improvements will be constructed, but does not include the use of parcels which are not yet divided into individual residential lots by the filing of a final map.

Assessors should therefore familiarize themselves with three concepts unique to remainder parcels: New Parcels, Vacant Land Held for Development, and Change of Use.

· New Parcels of Real Property

NAC 361.61014 “New parcel” defined. (NRS 360.090, 361.4722) “New parcel” means a parcel for which a new or different assessor parcel number has been assigned from the prior year as a result of the division of any previously existing parcel or parcels, the combination of any previously existing parcels, or any change in the configuration of any parcels or of lot size or lot boundaries, by means of a parcel map, subdivision map, certificate of land division, long-term lease, action of any governmental entity or any other means.

NAC 361.61016 “New parcel for development” defined. (NRS 360.090, 361.4722) “New parcel for development” means each new parcel which is not eligible for the partial abatement in the current year.

New parcel means any unit of real property that received a new APN for the current year as the result of a parceling transaction like a split, combination, or boundary line adjustment. NAC 361.61016 defines a new parcel for development by exclusion as the opposite of a remainder--a new APN that counts as new assessed value outside the tax cap.

· Vacant Land Held for Development

NAC 361.6103 “Vacant land held for development” defined. (NRS 360.090, 361.4722) “Vacant land held for development” means land which is held for investment or future development and has not previously been held for residential use, commercial or industrial use, institutional use or recreational use.

The key to identifying remainder parcels thus rests with the definition of vacant land held for development--land not previously held for residential, commercial or industrial, institutional, or recreational use. Observe that this restriction does not apply to agricultural or open-space uses and that the phrase “held for investment or future development” has no specific definition. In general, one may assume that owners hold all vacant land for investment or future development.

Although it may seem strange, once improved, a remainder parcel of land never again qualifies as vacant land held for development. Apparently, if one removes an improvement to create a vacant lot, it becomes a commercial use regardless of its authorized use as vacant land. Of course, this only applies to remainder parcels appearing on the roll for the first time in the current year.

· Change of Use

A new parcel only counts as new value not subject to abatement if it undergoes a change of remainder use. As a Boolean construct the rule for change of remainder use looks like this:

IF [vacant land for development

AND (mapped residential subdivision OR new construction)]

OR [vacant land not for development

AND remainder use change]

THEN new parcel for development outside tax cap

A change of remainder use occurs when vacant land held for development satisfies one of two conditions:

· A subdivision map creates individual residential lots. Observe that this rule applies only to residential subdivisions, not to commercial or industrial parks.

· New construction on the parcel improves it from vacant to one of the remainder use classifications.

A change of use for other remainder use types, including vacant land classified as commercial, occurs when the (actual) use of the parcel changes from one remainder use classification to another. Of course, this includes vacant lots created by removing existing improvements, although some interested parties might argue that land remains in commercial use after one demolishes a commercial improvement. Remember, though, that these changes only apply to new, not existing, parcels.

NAC 361.61034 New parcels: Evaluation; determination of change in use; effect of determination. (NRS 360.090, 361.4722)

1. Each new parcel must be separately evaluated to determine whether there has been any change in the use of the property that comprises the parcel.

2. A determination that there is a change in the use of the property must be based on a finding that:

(a) The property was being used as vacant land held for development as of the commencement of the prior year and:

(1) As the result of the recording of a subdivision map creating individual lots for residential development, the property is held for residential use as of the commencement of the current year; or

(2) As the result of new construction on the parcel sufficient to allow for an identification of the use of the property, the property is in agricultural use, open-space use, residential use, commercial or industrial use, institutional use or recreational use as of the commencement of the current year; or

(b) The use of the property as of the commencement of the current year for agricultural use, open-space use, residential use, commercial or industrial use, institutional use or recreational use is different from the use of the property as of the commencement of the prior year.

VALUING REMAINDER PARCELS

NAC 361.61036 - 361.61038 describe the procedure for identifying and calculating the tax abatement for remainder parcels. As with changes in actual or authorized use, the rules deal directly with tax computation instead of valuation, but this chapter contains an Excel worksheet to help assessors split value into existing value subject to abatement and new value outside the tax cap. The following examples demonstrate the subtleties of identifying and applying abatements to remainder parcels.

EXAMPLE RP01: VACANT PARCEL SPLIT


NAC 361.61036-38

EXAMPLE RP03

8.0%


0.035700


PRIOR YEAR

TOTALS

APN 001

ACRES

640.00

640.00

GROSS TAXABLE VALUE

640,000

640,000

GROSS ASSESS VALUE

224,000

224,000

-

NET TAXES DUE

7,996.80

7,996.80

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

NEW APN 002

480.00

480.00

REMAINDER APN 003

160.00

160.00

-

-

TOTALS

640.00

640.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

NEW APN 002

75.0%

75.0%

REMAINDER APN 003

25.0%

25.0%

-

0.0%

0.0%

-

0.0%

0.0%

TOTALS

100%

100%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

NEW APN 002

168,000

168,000

REMAINDER APN 003

56,000

56,000

-

-

-

-

-

-

TOTALS

224,000

224,000

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

NEW APN 002

5,997.60

5,997.60

REMAINDER APN 003

1,999.20

1,999.20

-

-

-

-

-

-

TOTALS

7,996.80

7,996.80

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

NEW APN 002

168,000

-

5,997.60

6,477.41

1.08

REMAINDER APN 003

67,200

-

1,999.20

2,159.14

1.08

-

-

-

-

-

-

TOTALS

235,200

-

7,996.80

8,636.55

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

NEW APN 002

5,997.60

-

-

5,997.60

-

5,997.60

REMAINDER APN 003

2,399.04

-

-

2,399.04

(239.90)

2,159.14

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

8,396.64

-

-

8,396.64

(239.90)

8,156.74

The owner of 15 acres of vacant land held for development APN 001 (LUC 10) divides it into three 5 acre parcels APN 002, 003 & 004. Because no new construction or change of remainder use has occurred, all three new parcels count as remainders. Last year, the assessor valued comparable land at $10,000/acre, which has increased to $12,500/acre for the current year. Because no change of authorized use has occurred either, the $2,500/acre increase in full cash value falls under the tax cap. (see Example RP01)

EXAMPLE RP02: BLM RAW LAND


NAC 361.61036-38

EXAMPLE RP04A

MIXED USE PROPERTY

0.035700


PRIOR YEAR

TOTALS

APN 001

ACRES

40.00

40.00

GROSS TAXABLE VALUE

42,000

42,000

GROSS ASSESS VALUE

14,700

14,700

-

NET TAXES DUE

524.79

524.79

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

REMAINDER APN 002

30.00

30.00

REMAINDER APN 003

10.00

10.00

-

-

TOTALS

40.00

40.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

REMAINDER APN 002

71.4%

71.4%

REMAINDER APN 003

28.6%

28.6%

-

0.0%

0.0%

-

0.0%

0.0%

TOTALS

100.0%

100.0%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

REMAINDER APN 002

10,500

10,500

REMAINDER APN 003

4,200

4,200

-

-

-

-

TOTALS

14,700

14,700

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

REMAINDER APN 002

374.85

374.85

REMAINDER APN 003

149.94

149.94

-

-

-

-

-

-

TOTALS

524.79

524.79

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 002

10,500

-

374.85

404.84

1.08

REMAINDER APN 003

4,200

-

149.94

154.44

1.03

-

-

-

-

-

-

TOTALS

14,700

-

524.79

559.28

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

REMAINDER APN 002

374.85

-

-

374.85

-

374.85

REMAINDER APN 003

149.94

-

-

149.94

-

149.94

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

524.79

-

-

524.79

-

524.79

BLM owns 4 sections (2,560 acres) of tax-exempt range land (APN 001, Land Use Code 19). BLM sells one section (APN 003, 640 acres) at a public reserve price auction for $640,000 ($1,000/acre).

If we consider range land an institutional (government) remainder use, the new parcel counts as a remainder commercial use. Since a change of remainder use has occurred, APN 002 (LUC 19) counts as a remainder parcel and APN 003 (LUC 10) counts as a new parcel for development. (see Example RP02A)

If we treat tax-exempt range land as vacant land held for development, however, the new parcel also counts as vacant land held for development. No change of remainder use has occurred, so both parcels count as remainders. Because a change of authorized use has occurred, however, some portion of incremental unit value may count as new land not subject to abatement.

Prior to the sale, the assessor valued all tax-exempt range land at $100/acre. Because BLM does not sell land for less than its reserve price, the assessor valued the new parcel APN 003 at $1,000/acre in the current year and $250/acre in the base year 2004-05 based on auctions at that time. As a new parcel for development, the entire $640,000 counts as new value outside the tax cap. As a remainder, however, $498,946 would count as existing value subject to abatement and only $141,054 would count as new taxable value outside the tax cap, which reduces the tax bill by nearly $5,300. In order to avoid disparate treatment, the Department recommends that range land be considered an institutional remainder use in this example. (see Example RP02B & Example RP02AU)


NAC 361.61036-38

EXAMPLE RP04B

8.0%


0.035700


PRIOR YEAR

TOTALS

APN 001

ACRES

40.00

40.00

GROSS TAXABLE VALUE

40,000

40,000

GROSS ASSESS VALUE

14,000

14,000

-

NET TAXES DUE

499.80

499.80

-

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

NEW APN 002

30.00

30.00

REMAINDER APN 003

10.00

10.00

-

-

TOTALS

40.00

40.00

-

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

NEW APN 002

75.0%

75.0%

REMAINDER APN 003

25.0%

25.0%

-

0.0%

0.0%

-

0.0%

0.0%

TOTALS

100%

100%

0.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

NEW APN 002

10,500

10,500

REMAINDER APN 003

3,500

3,500

-

-

-

-

-

-

TOTALS

14,000

14,000

-

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

NEW APN 002

374.85

374.85

REMAINDER APN 003

124.95

124.95

-

-

-

-

-

-

TOTALS

499.80

499.80

-

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

NEW APN 002

-

10,500

374.85

404.84

1.08

REMAINDER APN 003

4,200

-

124.95

128.70

1.03

-

-

-

-

-

-

TOTALS

4,200

10,500

499.80

533.54

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

NEW APN 002

-

374.85

-

374.85

-

374.85

REMAINDER APN 003

149.94

-

-

149.94

(21.24)

128.70

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

149.94

374.85

-

524.79

(21.24)

503.55


NAC 361.61036-38

EXAMPLE RP05

8.0%


0.035700


PRIOR YEAR

TOTALS

APN 001

APN 002

ACRES

20.00

10.00

10.00

GROSS TAXABLE VALUE

16,117,200

8,058,600

8,058,600

GROSS ASSESS VALUE

5,641,020

2,820,510

2,820,510

NET TAXES DUE

201,384.41

100,692.21

100,692.21

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

ACRES APN 002

REMAINDER APN 003

10.00

8.00

2.00

REMAINDER APN 004

10.00

2.00

8.00

-

-

TOTALS

20.00

10.00

10.00

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

PERCENTAGE NET

TAXES APN 002

REMAINDER APN 003

50.0%

80.0%

20.0%

REMAINDER APN 004

50.0%

20.0%

80.0%

-

0.0%

0.0%

0.0%

-

0.0%

0.0%

0.0%

TOTALS

100%

100%

100.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

GROSS ASSESSED

VALUE APN 002

REMAINDER APN 003

2,820,510

2,256,408

564,102

REMAINDER APN 004

2,820,510

564,102

2,256,408

-

-

-

-

-

-

-

-

TOTALS

5,641,020

2,820,510

2,820,510

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

TAXABLE BASIS

ALLOCATION APN 002

TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION

REMAINDER APN 003

100,692.21

80,553.77

20,138.44

-

-

REMAINDER APN 004

100,692.21

20,138.44

80,553.77

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

201,384.42

100,692.21

100,692.21

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 003

3,049,200

-

100,692.21

108,747.59

1.08

REMAINDER APN 004

3,049,200

-

100,692.21

108,747.59

1.08

-

-

-

-

-

-

TOTALS

6,098,400

-

201,384.42

217,495.18

CURRENT YEAR

NOMINAL TAX

NEW PROPERTY TAX

EXEMPT TAX

TAX BEFORE

ABATEMENT

TAX ABATEMENT

NET TAXES DUE

REMAINDER APN 003

108,856.44

-

-

108,856.44

(108.85)

108,747.59

REMAINDER APN 004

108,856.44

-

-

108,856.44

(108.85)

108,747.59

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TOTALS

217,712.88

-

-

217,712.88

(217.70)

217,495.18


NAC 361.61036-38

EXAMPLE RP06

3.0%


0.035700


PRIOR YEAR

TOTALS

APN 001

APN 002

ACRES

2.00

1.00

1.00

GROSS TAXABLE VALUE

270,000

135,000

135,000

GROSS ASSESS VALUE

94,500

47,250

47,250

NET TAXES DUE

3,373.65

1,686.83

1,686.83

PRIOR YEAR

TOTAL ACRES

ACRES APN 001

ACRES APN 002

REMAINDER APN 003

1.00

0.75

0.25

REMAINDER APN 004

1.00

0.25

0.75

-

-

TOTALS

2.00

1.00

1.00

-

-

PRIOR YEAR

PERCENTAGE NET

TOTAL TAXES

PERCENTAGE NET

TAXES APN 001

PERCENTAGE NET

TAXES APN 002

REMAINDER APN 003

50.0%

75.0%

25.0%

REMAINDER APN 004

50.0%

25.0%

75.0%

-

0.0%

0.0%

0.0%

-

0.0%

0.0%

0.0%

TOTALS

100%

100%

100.0%

0.0%

0.0%

PRIOR YEAR

TOTAL GROSS

ASSESSED VALUE

GROSS ASSESSED

VALUE APN 001

GROSS ASSESSED

VALUE APN 002

REMAINDER APN 003

47,251

35,438

11,813

REMAINDER APN 004

47,251

11,813

35,438

-

-

-

-

-

-

-

-

TOTALS

94,502

47,251

47,251

-

-

PRIOR YEAR

TOTAL TAXABLE BASIS

ALLOCATION

TAXABLE BASIS

ALLOCATION APN 001

TAXABLE BASIS

ALLOCATION APN 002

REMAINDER APN 003

1,686.86

1,265.14

421.72

REMAINDER APN 004

1,686.86

421.72

1,265.14

-

-

-

-

-

-

-

-

TOTALS

3,373.72

1,686.86

1,686.86

-

-

CURRENT YEAR

EXISTING ASSESSED

VALUE

NEW ASSESSED VALUE

TAX ABATEMENT BASIS

CAPPED TAX

CAP FACTOR

REMAINDER APN 003

48,443

4,057

1,686.86

1,737.47

1.03

REMAINDER APN 004

48,443

4,057

1,686.86

1,737.47

1.03

-

-

-

-

-

-

TOTALS

96,886

8,114

3,

Terry Rubald - Nevada€¦ · completed project equals $500,000. The land had a full cash value of...

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Transcript of Terry Rubald - Nevada€¦ · completed project equals $500,000. The land had a full cash value of...