Allocating Purchase Price to Real Property vs Goodwill

mobile home university
21

I linked my accountant to this thread as we were working to establish basis on last years purchase. And based on his professional feedback , we were able to establish what we felt comfortable with and substantiate should there be an issue.

I wont take this project on at this time :slight_smile:

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In New Mexico, property taxes are based on 1/3 of the full market assessed value. Vague terminology, but essentially this is whatever the assessor considers the FMV which includes goodwill in addition to land and improvements.

How do your states determine the assessed value?

23

In Texas our county uses pixie dust, and a proprietary algorithm based on squirrel mating calls to determine the assessed value of our properties.

I have successfully sued the county for one of my commercial properties, and it’s amazing how you get a 3rd party outside that county to look at the situation and see the whole thing is a fraud. I got a 40% reduction on my assessed value. Then the county then issues you a 1099 for the re-imbursement check. You literally cannot ever fully win.

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24

I found this discussion very informative while looking into my allocation of purchase price for a MHP acquisition. I have a couple of questions related to purchase price allocation:

  1. Frank and many others on this forum recommended a deal structure that involving 2 companies/acquirers, i.e., Homes LLC that acquires POHs and personal properties (e.g., trucks, inventories) and manages the park, and Park LLC that owns the real estate. When doing purchase price allocation, I was wondering whether Park LLC or Homes LLC should own the improvements (e.g., water/sewer line, hookup, etc) and goodwill?

  2. From the discussion above, I understood that recommendation is to allocate low value to real estate, and high value to goodwill for tax benefits. If so, the Deed would show a low purchase price for the real estate, which may be around 1/3 of total purchase price in my particular case. Curious to know what the bank/lender may react to this? If I’m in the shoes of the bank, I may be a little uncomfortable to know that 2/3 of the loan is actually used to buy goodwill (though goodwill in theory is also a part of collateral).