GPA PRESIDENT LARRY HIRSH ON CNN
As a result of Donald Trump's rise to the republican nomination for President, I've been interviewed by several news organizations about his golf properties (click on adjacent photo for CNN story).
It occurred to me during these interviews that there are some misunderstandings about real estate tax assessments. Though this (and my interviews) offer no opinions about the Trump properties, I thought it a good idea to use this space to clarify a few things.
First, golf properties typically trade, and are valued as going concerns (real estate, personal property and business value). However, real estate tax assessments apply only to real estate. Often, there is a spread between the going concern and real estate values that would indicate a tax assessment lower than the price a golf property may have sold for.
Golf courses are buisnesses that use large amounts of real estate. They are assessed for their real estate value but this has no impact on one's federal income tax. The value of the going concern is sometimes measured by a gross revenue multiplier. The value of the real property is then allocated from that value through any of several procedures used by appraisers.
Whether Mr. Trump's assertions in his assessment appeals are justified or not will be determined throgh the course of those appeals. He, like any businessman seeks to lower his tax burden, while at the same time building his financial statement. However, like I said on CNN, "you can't have it both ways" and the value is what it is, albeit with the wrinkle of going concern vs. real property value.