Publishing company sale/leaseback creates potential property tax liability!
Total Tax Savings: $ 125,000
In order to raise operating capital a large publishing firm in Southern California sold their Corporate Headquarters in a sale/leaseback transaction that was $1,000,000 higher than the actual “fair market value” of the real estate. They took back a long term lease well above the existing market rental rates. The assessor enrolled the sales price as the new base year value for the property relying on Rule 2 of the Revenue & Taxation Code.
Protax LLC appealed this assessment arguing that the true value of the real estate should be limited to the real property and any additional value created by the inflated lease should be disregarded for property tax purposes. We neede to overcome the presumption of Rule 2 which presumes the sales price to represent “full cash value”. A complete analysis was prepared and submitted to the county demonstrating the property’s true taxable value based on a market information and a valuation report of the fair market value of the property. The base year assessment was reduced permanently reducing the base year value and in the ensuing tax years additional reductions were obtained using Proposition 8.
Client benefit
Reduced Assessment, Refund to Taxpayer
Resolution
Client assessment temporarily reduced and future assessments monitored, reviewed, and re-evaluated annually to ensure assessment is fairly assessed.
