Evidence of Construction Costs and Comparable Assessments Insufficient to Challenge Indiana Homeowner’s Property Tax Value

Evidence of Construction Costs and Comparable Assessments Insufficient to Challenge Indiana Homeowner’s Property Tax Value

In Guthrie v. Clark County Assessor (August 13, 2019), Taxpayer challenged the 2018 assessment of her home, pole barn and other improvements before the Indiana Board of Tax Review.

She argued that the actual construction costs were below the assessed value. Taxpayer’s husband was a builder and contractor, and he built the improvements with help from subcontractors. Moreover, he failed to keep all of the receipts and could not fully separate the costs from three other homes which he was constructing. Nevertheless, he reported spending less than the property’s assessed value on the property, which at $334,600 equated with $116 per square foot.

In addition, Taxpayer presented a summary of the assessed values to sales prices for home sales in the neighborhood for 2017 and 2018. She also provided assessment information for thirteen neighborhood homes, showing a median year of construction of 1970, a median depreciation adjustment of -35%, and a median assessed value of $78 per square foot. Taxpayer argued that because the subject property was new, it should be assigned its own neighborhood and should receive no positive neighborhood factor.

Assessor attacked the Taxpayer’s evidence on various grounds. Among other arguments, the Assessor asserted that Taxpayer’s “analyses also failed to comply with the Uniform Standards of Professional Appraisal Practice (“USPAP”).”

The Indiana Board found that Taxpayer’s arguments regarding depreciation and the neighborhood factors was merely attacking the assessment methodology used by the Assessor, which is insufficient to rebut the presumption that the assessment is correct.

Taxpayer “came up short” arguing that comparable assessments indicated a lower value under Ind. Code § 6-1.1-15-18 (Section 18) or under equity and uniformity principles. The Board explained:

To effectively use an assessment comparison approach, parties must show the
properties are comparable to the subject using generally accepted appraisal and
assessment practices. To establish that properties are comparable, the proponent must identify the characteristics of the subject property and explain how those characteristics compare to the characteristics of the purportedly comparable properties. Similarly, the proponent must explain how any differences between the properties affect their relative market values-in-use.

(Citations omitted). Taxpayer failed to meaningfully compare the subject property to the purported comparable properties. “While the properties may share similarities to the subject due to their location, [Taxpayer] failed to discuss their characteristics in any detail.” In addition, she failed to explain why adjustments to the comparable sales were unnecessary. And she failed to calculate and present a requested value.

Taxpayer’s uniformity and equity argument likewise failed. She presented no sales ratio study, and provided no market data to show the subject property’s market value – meaning she did not show the sales ratio for the subject property in order to compare it with those of neighborhood properties.

Testimony regarding costs of construction was too vague to be probative, the Board concluded. Evidence suggested that the costs incurred may, in fact, have been below market. Finally, the board noted that “there is no indication that [the husband’s] estimates complied with USPAP.”

The Assessor’s 2018 assessment stood.

Image by rosamore.

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