VAB Evidence Part 2: Use of Sales That Close After the January 1st Assessment Date


One of the more confusing issues that seems to arise during Value Adjustment Board hearings is the question of whether and to what extent the Property Appraiser and the taxpayer can use sales that close after the January 1st assessment date to support their respective opinions of value.  The short answer is that there is no legal prohibition against using post-assessment date sales as evidence.  Ultimately, the issue is the just value of the property as of January 1st, and any evidence that tends to indicate the value of the property on that date may be admissible.

The confusion about this issue arose, in part, because of Florida Department of Revenue Bulletin PTA 06-08, wherein the Department of Revenue advised Florida county property appraisers that the use of sales that occur after January 1st to prepare their tax rolls would be inconsistent with the requirements of Florida law.  This bulletin raised some eyebrows among the appraisal community, as many appraisers and attorneys felt that, particularly when the market was in a state of transition on January 1st, post-assessment date sales could be indicative of a market trend that affected the value of the property on January 1st.  The bulletin also appeared to conflict with the case of Bystrom v. Equitable Life Assurance Society, wherein the appellate court held that evidence (in that case, income data) that comes to light after the assessment date may be relevant to the value as of January 1st.

Thereafter, the Department of Revenue issued Bulletin PTO 08-02, which replaced Bulletin PTA 06-08.  In this new bulletin, the Department reviewed the case law in more detail and came to the conclusion that post-assessment date sales may be considered if they are probative of the just value on the assessment date.  Specifically, the Department advised county property appraisers that post-assessment date sales may only be considered in preparing the tax roll when the following four conditions are met:

1.  When post-assessment date sales are probative of just value for the subject property as of January 1st;

2.  When post-assessment date sales are not used as a substitute for pre-assessment date sales;

3.  When post-assessment date sales are considered only in conjunction with pre-assessment date sales;  and

4.  When the consideration of post-assessment date sales is otherwise consistent with law.

In short, the Department indicated that, in preparing their tax rolls, county property appraisers may consider post-assessment date sales, as long as they are considered in conjunction with pre-assessment date sales and the sales are indicative of the January 1st value.

Of course, as a practical matter, because the property appraisers must submit their tax rolls by July 1st, they are simply unable to use sales that occur late in the year.  Thus, sales that occur later in the year will likely not be admissible to prove that the Property Appraiser failed to properly consider those sales, since it would have been impossible to consider a sale that had not yet occurred.  And even when there is a sale of the actual property in question, the court in Haines v. Holley held that a sale that occurs in June should not necessarily be relied on to assess the property as of January 1st.  However, based on the current state of the law and the Department’s most recent bulletin, it appears that both the Property Appraiser and the taxpayer could conceivably use post-assessment date sales to defend their respective opinions of value, as long as they can tie the sales to the January 1st assessment date.

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Deadline Approaching to Submit Evidence of Chinese Drywall


The Lee County Property Appraiser has announced that the deadline to submit evidence that your home is affected by toxic Chinese drywall is September 18, 2009.  Click here for more information.  Upon submitting such evidence, you may be able to obtain a reduction of 50% off the just value of your home, according to a memo released last week.

I will be looking into other counties’ policies and hopefully posting some more information on this issue, so stay tuned.  If you have information about the requirements of any other counties that are making adjustments for Chinese drywall-related issues, please feel free to post a comment.

How to File a Value Adjustment Board Petition


Property owners who disagree with the Property Appraiser’s assessment of their property have the option of scheduling an informal conference with the Property Appraiser, filing a petition to the Value Adjustment Board [“VAB”], bringing an action in circuit court, or all of the above.  If there is a clear error in the Property Appraiser’s calculations or in their assumptions about your property, you can probably resolve the issue with a simple phone call.  However, if there is a serious disagreement about the ultimate value of the property, and you want to file a VAB petition, this post will explain that process.

What is the VAB?

The VAB is a a five member quasi-judicial board that consists of two county commissioners, one school board member, and two citizen members (one appointed by the county commission and the other appointed by the school board).  The VAB is not affiliated with the Property Appraiser’s office. 

The Petition

The VAB petition forms can usually be obtained from the Clerk of Court and the Property Appraiser.  The petition must be filed with the Clerk of the Value Adjustment Board no later than the 25th day after the Property Appraiser mails the Truth in Millage [“TRIM”] notice to the taxpayers, which usually occurs toward the end of August.  The VAB may only consider untimely petitions upon a showing of good cause, so it is important to file by the statutory deadline.

The Hearing

Once your petition is filed, if you request a hearing, the Clerk will schedule a hearing before a Special Magistrate.  In small counties, the hearings may be held before the entire VAB.  However, in larger counties, special magistrates are appointed to hear testimony, take evidence, and make recommendations to the VAB.  In disputes about the value of real property, the Special Magistrate will be a real property appraiser.  In disputes about the value of tangible personal property, the Special Magistrate will be a tangible personal property appraiser.  In exemption and classification disputes, the Special Magistrate will be an attorney.  The Special Magistrates are hired by the VAB, and are not affiliated with the Property Appraiser’s office.

You are entitled to be represented by an attorney or other agent in the VAB proceeding, but that is not a requirement.  If you decide to proceed without an attorney, you should be sure to review both the applicable Florida Statutes and any local rules adopted by your county’s value adjustment board.  In particular, you need to be aware of the requirements for exchanging evidence prior to the hearing as failure to do so may result in your evidence being excluded. 

Prior to the hearing, the Special Magistrate will usually review the procedures with all of the petitioners in attendance and administer an oath to all testifying witnesses.  When it is your turn to present your case, you will have an opportunity to present your evidence and the Property Appraiser’s representatives or counsel will be permitted to cross-examine you.  You will have the same right when the Property Appraiser presents their case.  You may also be given time for a brief rebuttal (basically, the last word).  Some VABs are stricter than others in applying the rules of evidence.   In general though, you should always be prepared to present live witness testimony, as affidavits, letters and other hearsay evidence will usually not be admitted. 

The Decision

Some Special Magistrates will advise you of their decision at the conclusion of the hearing, but most will take the decision under advisement and issue a written recommendation shortly after the hearing.  The written recommendations are submitted to the Value Adjustment Board, with copies to both parties.  The Value Adjustment Board will hold a final meeting or meetings, during which it will either reject or approve the recommendations of the Special Magistrates.  Some VABs allow petitioners to address the Board, but generally no new evidence may be presented at the final VAB meeting.  Any evidence you want to present must be presented at the hearing before the Special Magistrate. 

Following the final VAB meeting, you will receive a Final Record of Decision, which represents the final decision of the Board.  If your petition is approved, your assessment will be reduced accordingly.  If it is denied, you would have the right to file an action in circuit court, but it must be filed within 60 days of the Record of Decision.

Frequently Asked Questions About Property Tax Bills


With TRIM notices being issued around Florida in the coming weeks, this post will attempt to answer three of the most commonly-asked questions about property tax bills:  (1) Why is my property assessed at a higher value than my neighbors’ similar property?  (2) Why is my assessed value higher than the price I paid for the property?  (3) Sales prices are going down, so why is my assessment going up?

Why is my property assessed at a higher value than my neighbors’ similar property?  The reason the property tax system was historically considered to be a fair system of taxation was that everyone was assessed based on the fair market value of their property, and that was that.  In the last few years, however, the number of exemptions, special classifications and assessment caps has exploded, thus resulting in similar properties within the same neighborhood being taxed at vastly different rates, depending on when the property was purchased, whether the purchaser was a first-time home buyer, whether the property has a homestead exemption and whether the owner “ported” their cap from another property.

The short answer is that, while the assessed values may differ for a variety of reasons, if the properties are truly similar, the just value should reflect that similarity.  If the just values are substantially different, it is most likely due to differences in the size or configuration of the lot, the age of the improvements, or the overall quality of the construction.  However, if you feel that a mistake has been made, you should contact the Property Appraiser.

Why is my assessed value higher than the price I paid for the property?  The just value of your property is determined as of January 1st of the tax year in question.  While the Property Appraiser is statutorily required to consider the price paid for your property, he can disregard that factor if it is not relevant, i.e. if the sale occurred too long ago or it was not an arms-length transaction, for example.  In most cases, the assessed value is influenced the most by sales of similar property in the area during the last calendar year.

As an example, if you paid $100,000 for your property in January 2005, but similar properties were selling for closer to $200,000 in the last few months of 2008, your 2o09 assessment will likely be higher than what you paid for the property.

If I re-finance my property or take out a line of credit, will my assessment increase?  Probably not.  The Property Appraisers generally base their determinations on actual consummated sale transactions between willing buyers and willing sellers.

Sales prices are going down, so why is my assessed value going up?  Two issues are at play here.  First, the Property Appraiser is required to assess all property at its value as of January 1st, and must submit his or her completed tax roll to the Department of Revenue by July 1st.  Thus, the Property Appraisers tend to rely more on sales that occurred during the previous calendar year, and possibly sales from the first couple months of the current year.  Thus, if sales begin to decline in the spring or summer, that decrease probably will not be recognized until the following tax year.

The other possible reason is the “re-capture” provision of the Save Our Homes Amendment.  If you have had a homestead exemption on your property for many years, chances are your assessed value (on which taxes are determined) has been much lower than the fair market value of your property.  This is because, by law, the assessment of homestead property cannot increase more than 3% per year (or the percent change in the CPI).  However, if your assessment is lower than the fair market value of your property, the assessment will increase by that 3% each year until it matches the just value.  So, even if the just value of your property decreased, as long as your assessed value was lower, that assessed value will continue increasing by 3% per  year or the CPI, until it equals the just value.

How Does the Property Appraiser Determine the Value of Your Property?


  The Florida Constitution requires the county Property Appraisers to assess all property at its just value, which has been defined as “fair market value.”  The purpose of this post is to explain, in a nutshell, how the Property Appraisers determine the just value of residential, commercial and tangible personal property in their jurisdictions.

First, it is important to note that the Property Appraiser must consider eight statutory factors, such as the present cash value, the highest and best use and current use of the property, location, quantity or size, the cost of the property and improvements, the condition of the property, the income from the property, if any, and the net proceeds from the sale of the property.

Residential PropertyIn most counties, residential property is assessed by a computer-assisted mass appraisal [“CAMA”] system.  The Property Appraisers’ staff gathers market data and inputs it into the CAMA system, which produces values based on recent sales and construction costs.  The values for each neighborhood may be reviewed by the staff and compared to recent sales to verify the accuracy of the assessments.

Commercial Property.  Values for commercial property may be calculated in a variety of ways.  Income-producing property, such as hotels, apartment complexes and office buildings, may be assessed by the income approach, which utilizes rental and sales data from similar properties.  The sales comparison approach may also be used for commercial properties that are of a type that is commonly bought and sold.  Unusual or special-purpose properties may be assessed by the cost approach, which adds the depreciated cost of the improvements to the land value to produce an total assessed value.

Tangible Personal Property.  Tangible personal property is self-reporting, and thus the Property Appraisers rely heavily on taxpayers to accurately report the quantity, age and condition of their personal property.  If deemed accurate, costs reported by the taxpayer are usually depreciated according to economic life tables and depreciation schedules published by the Florida Department of Revenue, or developed by the local Property Appraiser based on local market data.

Understanding Your Truth In Millage (TRIM) Notice


All property owners in Florida will soon be receiving what is known as a Truth in Millage notice from their county Property Appraiser.  The purpose of the TRIM notice, as it is called, is to advise you of the value that the Property Appraiser has assigned to your property for the current tax year, and to notify you of how the taxing authorities’ proposed millage rates will affect your taxes.  Below are some frequently asked questions about the TRIM notices.

What is the difference between the property assessment and my property taxes?  Your ad valorem property taxes are determined by multiplying the taxable value of your property by the millage rate for the current tax year.  The taxable value of the property is determined by the county Property Appraiser, a constitutional officer.  The millage rate is adopted each year by the local taxing authorities for your area.

Example:  If your property has a taxable value of $100,000 and the millage rate is .001, your taxes would be $100 (or $100,000 x .001).  If your property had a taxable value of only $90,000, but the millage rate was .002, then your taxes would be $180 (or $90,000 x .002).

What is the difference between just value, assessed value, and taxable value?  The just value represents the fair market value of the property as of January 1st of the current tax year, as determined by the Property Appraiser.  The assessed value is the value of the property after applying any laws that require the property to be assessed at less than just value (such as agricultural property classifications or the constitutional caps on increases in the assessment of homestead and certain commercial properties).  The taxable value represents the assessed value less any exemptions, such as the homestead exemption.  The taxable value is used to determine the ultimate amount of taxes that you will owe.

How do I object to my property taxes?  Objections to the millage rate should be addressed to the local governing body levying the taxes.  However, if you disagree with the values assigned to your property, you can meet with the Property Appraiser informally to discuss your concerns or you can file a petition to the Value Adjustment Board.  Petitions to the Value Adjustment Board must be filed no later than 25 days after the mailing of the TRIM notice.  You also have the right to challenge the assessments in court.