97-036
Response June 9, 1997
May
30, 1997
Dear
Alice:
The
purpose of this letter is to request an advisory opinion from the State Tax
Commission.
Utah
Code Annotated 59-2-102(13) states " 'intangible value' includes various
fees, services, closing costs, and brokerage commission related to a real
property sales transactions."
This
particular passage was enacted in 1996. Our office's research indicates in NAME
County that 10% of the price of a house relating to a real property sales
transaction is due to "various fees, services, closing costs, and
brokerage commissions.
At
the present time, NAME County is not applying this real property sales transfer
to any locally assessed property. The question I have is NAME County in
violation of the Utah State Statute if we fail to include the real property
sales transfer factor into the determination of our market value.
In
light of the fact that the Tax Commission has granted NAME County an extension
for completing the 1997 assessment roll to June 10, I would appreciate your
response as soon as possible.
I
appreciate your consideration of this matter. If you have any questions, or
need further information, please give me a call at #####.
Sincerely,
NAME
June
9, 1997
NAME
ADDRESS
CITY
STATE ZIP
Advisory
Opinion - Section 59-2-102 (13) of the Utah Code
Dear
Mr. XXXXX,
We have received your request for an
opinion concerning application of section 59-2-102 (13) of the Utah Code. We offer the following guidance:
Section 59-2-102 (13) was enacted in
1991, and it defines terms found in
sections
59-2-201
and 59-2-304. The term “intangible
value” as used in 59-2-102 (13) has no application outside of the provisions
of 59-2-201 and 59-2-304. Because the provisions of sections
59-2-201
and 59-2-304 lapsed on December 31, 1993, you need not make an adjustment for
closing costs, fees and brokerage commissions in assessments made beginning in
1994. In fact, to do so would be
violate the legislature’s intention to discontinue these adjustments after December 31, 1993, and the practice
would raise equal protection questions.
We understand that you, like other
county assessors, are concerned with
the impact of our decision in the WilTel case.
With regard to locally assessed commercial properties, it is our experience
that assessors are not impounding intangibles in their values and need not make
an adjustment. Traditionally assessors
have used market rents in applying the income approach to locally assessed
commercial property and have not used the income of the business which is
renting the property. To the extent
that assessors have used methodology which impounds "intangibles,"
such as direct capitalization using business income, in the value of the property,
the value of intangibles should be removed.
If you are not using such a method, the burden is on the taxpayer to
identify intangibles that are eligible for exemption. If a taxpayer asserts that intangibles are being taxed, you
should consider the evidence on a case by case basis.
Please let us know if you have other
questions.
For
the Commission,
Joe
B. Pacheco,
Commissioner