Property tax assessors or administrators sometimes rely on transactional data (e.g., the transaction purchase price or the purchase price allocation) to estimate the fair market value of a company’s taxable unit for property tax purposes. This may or may not be appropriate depending on the circumstances. In order to determine if it is reasonable to rely on transaction data for property tax purposes, the property tax assessor or administrator should have a clear understanding of the differences between the purchase price/purchase price allocation and the fair market value used for property tax purposes. This article explains the key differences between (1) a transaction purchase price or purchase price allocation and (2) the fair market value of a taxpayer company’s taxable assets for property tax purposes.
Market approach to value
Rotkowski, A. M., Smith, R. G., & Ramirez, J. C. (2012). The use and misuse of transaction data in valuations prepared for property tax purposes. Journal of Property Tax Assessment & Administration, 9(2), 23-32. Retrieved from https://researchexchange.iaao.org/jptaa/vol9/iss2/2