Property Taxes - Real Estate vs Business

When buying a park that is assessed below the purchase price, how do you predict what percentage of the purchase price the taxing authority will attribute to real estate vs the “business”. Or do you just proforma worst case where the assessed value is raised to the purchase price?

Appraisal districts are only supposed to be in the business of appraising land and improvements. They have no business (pun intended) assessing the value of a business. If they try to raise your taxes to the purchase price you need to fight that using comparable land sales and reasonable valuations for improvements (infrastructure, POH, etc) to bring that value down. You are not supposed to get taxed on the value of goodwill and other business items.

Some contracts spell out estimated land vs improvements vs goodwill value as part of the Purchase Price to help the conversation. Speak with your accountant and real estate attorney if you think you need more CYA.

You can ask the assessor what the taxes would be based on the purchase price - they have a formula that they use to calculate the tax. They typically say that they don’t know if it will increase. Sometimes it won’t change. I’ve found that the land value tends to stay in line with the land value of like properties even though you pay more for the park/property. I would find out what the max amount the taxes could be based on your purchase price and use that in your proforma. Anything you pay above the land and infrastructure value may be considered good will. I’m not an accountant so you should confirm all of this with one…