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Real Estate Law, 8th Ed.

by Marianne M. Jennings

Chapter 22Tax Aspects of Real Estate Ownership and Transfer

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Approaches Used for Assessed Value

Market approach Income approachCost approach

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Due Process for Property Owners and Tax

Assessments

1. Property owners must be notified of the assessed value of their property.

2. Property owners must be given a reasonable amount of time after assessment to gather information and prepare a protest.

3. Property owners must have a procedure for filing a protest and must be given instructions about the how’s and when’s of such a filing.

(continued on next slide)

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Due Process for Property Owners and Tax

Assessments

4. The local governmental body must provide a hearing forum: an administrative body or some form of judicial review for the property owners’ presentation of protests.

5. Property owners have the burden of proof, during the hearing, to show the overvaluation of the property.

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Collection of Property Taxes

Notice Notification of default Lien Notification of lien and foreclosure Notice of sale New U.S. Supreme Court

requirements on notice service

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Basis and Taxation on Gain in Sale of Real Property

Selling price of property $297,000Less Selling Expenses – $3,000Amount realized $294,000

Basis of Property Cost $275,000Depreciation +10,000Improvements + 2,000Adjusted basis $287,000Gain realized $7,000 

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Various Income Tax Issues in Real Property Ownership

DepreciationCapital gainsPassive or suspended lossesAt-risk issuesLow-income housing credits (Section

8 credits)1031 Exchanges