Indiana Tax Court affirms assessment reductions for retail property used as CVS

Indiana Tax Court affirms assessment reductions for retail property used as CVS

In Monroe County Assessor v. SCP 2007-C-26-002, LLC a/k/a CVS 3195-02 (Nov. 4, 2016), the Indiana Tax Court affirmed the 2009 – 2013 assessment reductions of a 13,000 square foot retail store operated as a CVS.  During the administrative appeal before the Indiana Board of Tax Review, both parties presented USPAP-compliant appraisals applying all three approaches to value (income, sales and cost).  The Assessor criticized Taxpayer’s appraisal for relying on comparable sales that were used for general retail purposes both pre- and post-sale rather than comparable data from properties used “for a successful ongoing CVS operation.”   Summarizing “well established” Tax Court precedent, the Indiana Board explained:

[A] property’s market value-in-use should be measured against properties with a comparable use (e.g., general retail or light manufacturing) as opposed to properties with identical users;

[I]t is not improper to consider vacant properties as comparable to occupied properties because market value-in-use measures the value of a property for its use and not of its use; and

[A] property’s market value and market-value-in use often coincide and thus, when determining a property’s market value-in-use, it is improper to reject out-of-hand an appraisal that estimates that property’s market value.

Slip op. at 3 (emphasis in original, citing several Tax Court cases).  In what the Tax Court described as a “lengthy discussion,” the Tax Court noted that the Indiana Board’s final determination “addressed the strengths and weaknesses of each of [the three approaches to value] within each Appraisal Report.”  Id.  at 4.  The Indiana Board assigned the most weight to the income approach in Taxpayer’s appraisal and reduced the assessments accordingly.

On appeal, the Assessor argued that the Tax Court’s prior decisions interpreting Indiana’s market value-in-use standard were wrongly decided and, therefore, it was unreasonable to rely upon them.  The Court concluded:  “This very same argument has already been advanced in – and rejected by – the Tax Court.”  Slip op. at 6.  The Court rejected the argument once again, stating that it “continues to stand by its analyses in those [prior] cases and need not repetitively address the argument in this opinion.” Id. 

The Assessor is seeking review of the Tax Court’s ruling by the Indiana Supreme Court.

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