Florida court rules against resale value used as tax appraisal value

TUGBrian · Aug 24, 2016

http://www.aroundosceola.com/osceola-appraisers-office-wins-lawsuit/

no suprise there....as if anyone expected the state to willingly give up that much tax revenue.

DeniseM · Aug 24, 2016

Interesting - How does this impact the DFC's of the world?

ottawasquaw · Aug 24, 2016

ok, that was a goofy lawsuit to begin with! The developer/owner did not want their own sales data used as a basis for assessment? This message board is proof that the value of a T/S is not the resale value, which is further proof that the appraiser/assessor did her job correctly. Granted, that is a little unusual for real estate, but it is what it is!

Saintsfanfl · Aug 25, 2016

DFC is not effected. Property tax value has nothing to do with individual timeshare value and fair market value of a timeshare ownership. Whether a property is a hotel or a timeshare should have no effect on the county property taxes. The county should still be entitled to their money no matter how the developer or owner decides to use the property. Whether you have a successful revenue producing business or you sit with an empty building it won't make a difference on the assessment and taxes owed.

The individual ownership and FMV is another matter entirely. The donation value for federal tax purposes must be based on what a current arms length transaction would bring for just the unit being "donated" and not the portion of the value of the property as a whole. Otherwise a millionaire could buy up $1 timeshares and give them away until their tax liability went to zero. The strict arms length FMV transaction requirement (which is $1 in this case) closes that loop hole.

It might look like the two government bodies are having the best of both worlds but in reality it is the only fair way to do it.

tschwa2 · Aug 25, 2016

I found it a little confusing but I think what they are saying is that they are not basing the tax on the value of the property as a whole- they are basing it on the sales figures they get from Wyndham for individual weeks and rejecting using the valuation of resale weeks. So it sounds like it does matter whether they are using it as a hotel or a timeshare or letting it sit empty. They decided rather than go with the potentially smaller value of the property as a whole- they decided to value the property for tax purposes based on Wyndham's sales.

To me this is having the cake and eating it too. If you go by individual units to make up the tax valuation then you should have to include both retail and resale values.

Saintsfanfl · Aug 25, 2016

Sorry, I jumped the gun and didn't read the whole article. The fair number should be somewhere in the middle but if I had to take a side it would be with the county. It is not fair to the county or the general public to use private resale transactions to lower the tax value. On the flip side it may not be fair to the owners to pad the tax value based on an inflated sales value that contained fat corporate profits and sales commissions but at the end of the day that's what they sold them for.

Keep in mind that the county is using any resale values that Wyndham is selling. They just aren't using individual to individual. Wyndham could solve this problem by managing the resales themselves but aren't they known to turn their noses on owners that want out? It's Wyndham that is the whole problem here.

tschwa2 said:
So it sounds like it does matter whether they are using it as a hotel or a timeshare or letting it sit empty.

Not really. Not empty anyway. There are using inflated sales values as the basis because Wyndham likes to sell retail. It keeps it high because of the benchmark set. It will not magically go lower unless the property as a whole is sold (presumably at a lower value) or Wyndham starts selling resales at a discount.

ronparise · Aug 25, 2016

Saintsfanfl said:
Sorry, I jumped the gun and didn't read the whole article. The fair number should be somewhere in the middle but if I had to take a side it would be with the county. It is not fair to the county or the general public to use private resale transactions to lower the tax value. On the flip side it may not be fair to the owners to pad the tax value based on an inflated sales value that contained fat corporate profits and sales commissions but at the end of the day that's what they sold them for.

Keep in mind that the county is using any resale values that Wyndham is selling. They just aren't using individual to individual. Wyndham could solve this problem by managing the resales themselves but aren't they known to turn their noses on owners that want out? It's Wyndham that is the whole problem here.

I havent read the the article so this may be a stupid question

what does this do to the value of a timeshare donated to a charity> If the appraisal is somewhere between what the developer charges and what I could buy it for on ebay, I could be that guy that donates 50 timeshares I bought for a dollar and then take a $250000 tax deduction.

tschwa2 · Aug 25, 2016

ronparise said:
I havent read the the article so this may be a stupid question

what does this do to the value of a timeshare donated to a charity> If the appraisal is somewhere between what the developer charges and what I could buy it for on ebay, I could be that guy that donates 50 timeshares I bought for a dollar and then take a $250000 tax deduction.

The IRS has said that FMV is what you can sell it for. Florida is saying that the property tax basis is what Wyndham can sell it for.

Saintsfanfl · Aug 25, 2016

The only thing that matters to the IRS is what you can easily buy it for on the open market. The PCC's have created that open market while the developers prefer a closed market where they control the higher pressure sale and high price.

Even if you could somehow argue a higher FMV than you paid the IRS is still going to point to what you paid and say the proof is in the pudding. You cannot manufacture a tax deduction out of thin air. This is why someone that paid full retail might have a leg to stand on or at least an excuse if an audit happens while someone that simply paid $1 could easily end up in prison.

vacationhopeful · Aug 25, 2016

ronparise said:
I havent read the the article so this may be a stupid question

what does this do to the value of a timeshare donated to a charity> If the appraisal is somewhere between what the developer charges and what I could buy it for on ebay, I could be that guy that donates 50 timeshares I bought for a dollar and then take a $250000 tax deduction.

Ron,
As a former state (NJ) licensed Tax Assessor, distressed or donated or $1 transfer or related party transfer (Parent to child) values are NOT USED in the assessment calculation. They are 'non-sales' or not qualified transfers ... in the assessment valuation.

So that eliminates about 90% of my timeshare ownership purchase valuations. So, can one argue, that 10 eBay auctions selling for $999 each interval (say a 1bdr fixed week or 154,000 Wyndham points), establishes the market or the 500 developer sales at $40,000 each defines the market? The wheel is tilted ... by volume to the Developer side of the table.

What should be appealed is WHAT Wyndham's developer sales are selling is NOT THE SAME new item, as a resale point or deed. Wyndham believes they are selling a AUDI with all the "bells and whistles" ... called Developer Benefits. Resale weeks are an used CHEVY model, stripped down vehicle... every benefit is extra... reservation transactions, housekeeping credits, extra Guest Certificates, no free unit upgrades, etc.

Then, balance the PERCENTAGE in points of unrelated transfers to the Developer Sales transfers.

Disallowing distressed sales in tax assessing gets argue in the courts all the time. I have recently attending a county tax assessor's appeals hearing. All bankruptcy sales were EXCLUDED as were all SHORT sales ... sales being distressed and not between parties in an open market. There were NO SALES in the open market .. because SHORT SALES were the only way to get any house sold. And the new buyers were totally enraged that the $425,000 house they brought at $165,000 did not trigger a new and way LOWER market appraisal value of $165,000 ... even after presenting that the ONLY sales occurring were in the $165K range in the last 2-3 years.

Teresa · Aug 26, 2016

Tax value shouldn't be on each individual unit

My take (and it could be coming from la-la land - but I like la-la land most of the time):

Tax value is generally what the 'property' (resort) is valued at as a whole - not the individual units. Each unit, then, is 'assigned' a value by the people who prepare the MF bills.

Once the resort is 'valued' by the assessor then each element (unit) is billed their 'share' (fair or not) of the entire resort. Sometimes the resort will assign a higher value on a prime week and a lower value on a not-prime week so the taxes might be different on these individual bills.

Let's say a resort is valued at $20,000,000 and it has 100 units. To keep math simple let's say there are only 50 weeks 'owned' by individual timeshare owners and the remaining time is for maintenance (this means there are 50 owners per unit - or 5,000 owners (50 owners x 100 units). Yes - there's a pool and other amenities on site - part of the $20M valuation. So, just for math's sake, we'll put the taxes at $350,000. Divide the $350,000 by 5,000 owners. Each owner's portion of the tax is $70. Use 'real numbers' and you'd get a better picture.

If the tax appraiser is using 'last sale' or 'reported' sales prices especially at a property like that and pays no real attention to what the resort is worth in brick and mortar and location and condition, then there is a serious disconnect going on.

I have yet to see tax value go down because a property sold for less than what the 'market value' on the tax bills says. However, I've seen tax value go up (along with the taxes) when something sells for 'closer to real market value'. I bought a brick building in a city not far from me for $10,200 back in 2014. It's still sitting at a market value of $88K on the tax bill. The single family home next to it sold for $8600 about a year before that. Still at $40K-something market value on the tax bill. Not worth the 'challenge the tax' to me right now (long story). BTW, replacement value on my 'cheap' building is $219K.

So .... I'm not sure I 'get' what we're talking about here. Do the timeshare people really have a 'say' in the value on a tax assessor bill?

Ty1on · Aug 26, 2016

Teresa said:
My take (and it could be coming from la-la land - but I like la-la land most of the time):

Tax value is generally what the 'property' (resort) is valued at as a whole - not the individual units. Each unit, then, is 'assigned' a value by the people who prepare the MF bills.

Once the resort is 'valued' by the assessor then each element (unit) is billed their 'share' (fair or not) of the entire resort. Sometimes the resort will assign a higher value on a prime week and a lower value on a not-prime week so the taxes might be different on these individual bills.

Let's say a resort is valued at $20,000,000 and it has 100 units. To keep math simple let's say there are only 50 weeks 'owned' by individual timeshare owners and the remaining time is for maintenance (this means there are 50 owners per unit - or 5,000 owners (50 owners x 100 units). Yes - there's a pool and other amenities on site - part of the $20M valuation. So, just for math's sake, we'll put the taxes at $350,000. Divide the $350,000 by 5,000 owners. Each owner's portion of the tax is $70. Use 'real numbers' and you'd get a better picture.

If the tax appraiser is using 'last sale' or 'reported' sales prices especially at a property like that and pays no real attention to what the resort is worth in brick and mortar and location and condition, then there is a serious disconnect going on.

I have yet to see tax value go down because a property sold for less than what the 'market value' on the tax bills says. However, I've seen tax value go up (along with the taxes) when something sells for 'closer to real market value'. I bought a brick building in a city not far from me for $10,200 back in 2014. It's still sitting at a market value of $88K on the tax bill. The single family home next to it sold for $8600 about a year before that. Still at $40K-something market value on the tax bill. Not worth the 'challenge the tax' to me right now (long story). BTW, replacement value on my 'cheap' building is $219K.

So .... I'm not sure I 'get' what we're talking about here. Do the timeshare people really have a 'say' in the value on a tax assessor bill?

As I understand it, it depends on the jurisdiction. At some resorts, the tax is assessed on the property as a whole, and the HOA allocates it among the owners. At others, owners are directly taxed and pay that separately from their MF.

ronparise · Aug 27, 2016

Saintsfanfl said:
The only thing that matters to the IRS is what you can easily buy it for on the open market. The PCC's have created that open market while the developers prefer a closed market where they control the higher pressure sale and high price.

Even if you could somehow argue a higher FMV than you paid the IRS is still going to point to what you paid and say the proof is in the pudding. You cannot manufacture a tax deduction out of thin air. This is why someone that paid full retail might have a leg to stand on or at least an excuse if an audit happens while someone that simply paid $1 could easily end up in prison.

I think I finally get it, IRS doesnt care what anyone paid for it. They care about what it can be sold for.. (not what wyndham can sell it for)

I could win a car on a game show for example (paid zero) and have to pay income tax on its value (what a dealership could sell it for) and then I could give it to a charity and claim a deduction based on what I could sell it for

And regarding property takes this court case that wyndham lost seems to follow the same logic Taxes are paid by wyndham based on what they can sell it for, not what we can sell them for

Ty1on · Aug 27, 2016

All owners pay the taxes, including Wyndham to the extent of unsold.

Larry M · Aug 27, 2016

First you have to find one...

ronparise said:
I havent read the the article so this may be a stupid question

What does this do to the value of a timeshare donated to a charity? If the appraisal is somewhere between what the developer charges and what I could buy it for on ebay, I could be that guy that donates 50 timeshares I bought for a dollar and then take a $250000 tax deduction.

Ha, ha!

First you have to find a charity (or 50 of them) that will accept a donated timeshare. I tried doing that without success. It's like trying to give away a no-longer-needed walker or "rollator." No charity wants one.

TUGBrian · Aug 27, 2016

there are no "charities" that want timeshares...

there are plenty of places that pretend to be charities that are happy to take huge upfront fees to "dispose" of your timeshare however.

in all these situations you are far better off just making a cash donation if your goal is to be charitable.

Florida court rules against resale value used as tax appraisal value

TUGBrian

DeniseM

ottawasquaw

Saintsfanfl

tschwa2

TUG Review Crew: Veteran

Saintsfanfl

ronparise

tschwa2

TUG Review Crew: Veteran

Saintsfanfl

vacationhopeful

TUG Review Crew: Rookie

Teresa

Ty1on

ronparise

Ty1on

Larry M

TUGBrian