Personal Property Assessment Reduced By Nearly Two-Thirds
Client: Global Manufacturer of Residential Heating & Cooling Equipment
Challenge: Provide Valuation to Appeal County’s High Valuation of Headquarters' Assets
A century-old global leader in residential heating, air conditioning and refrigeration markets petitioned the county where its headquarters was located for an appeal of its personal property tax assessment. The county had assessed the company's office furnishings and equipment at $9.25 million. The company was confident that the actual value of those assets was significantly less once market factors, depreciation and obsolescence were factored in. The company asked AccuVal to develop an appraisal that accurately reflected their current value.
AccuVal Approach
Much of the office machinery and equipment had been installed between eight and 12 months earlier, although some business equipment was even older, including equipment dating back a half-century. The county's assessment relied on the original cost of purchasing and installing the equipment, plus a straight-line depreciation schedule as the basis for its valuation.
AccuVal's direct experience of the market for used office furnishings was that it rapidly deteriorated under ordinary circumstances but, given a current financial crisis, the loss in value accelerated even faster than what is typically seen in a more stable market.
It was clear from the abundance of market transactions at AccuVal's disposal that the county's assessment was considerably higher than current market value. In conjunction with its thorough analysis of the marketplace, AccuVal interviewed original equipment manufacturers of similar office furniture and considered real-world costs to install and deinstall the systems, each factors that directly affect the demand for used equipment.
Bottom Line: County Agrees to Reduce Assessment by Nearly Two-Thirds
When the new valuation numbers were presented to the county tax assessors as part of the company's assessment appeal, the documentation and research provided by AccuVal convinced the appeals board to drastically reduce the company's tax burden. The revised assessment plummeted from $9.25 million the previous year to $3.8 million, and the current year assessment fell from $9.1 million to $3.3 million. The successful appeal lowered the company's tax base by $11.25 million in two years and established a precedent formula to following in future years.
The AccuVal AdVantage™
Experts in asset valuations needed for tax appeals. Decades of experience analyzing tangible and intangible assets from the ground up. Authoritative preperation that leads to amicable resolutions of tax disputes. That's The AccuVal AdVantage™ at work.
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