Managing Golf & Country Club Real Estate Taxes

How does one determine if a real estate tax assessment appeal is warranted?
There are typically four elements that make up a real estate tax liability:
  • Property Value
  • Equalization Ratio
  • Assessment
  • Millage Rate

Having a realistic estimate of the property’s value is key to the process as that determines the other elements.  A knowledgeable review of your property tax bill can begin the evaluation of whether an appeal has a good chance for success.

The process for appealing a property tax assessment varies from state to state, however in most cases involves the filing of a formal appeal, a hearing before a politically appointed board of view and then, if necessary an appeal to local or state courts.  While many appeals result in filings in court, few actually reach the trial stage, but we recommend always being prepared for the eventuality of trial.

The entire process can sometimes take several years, if the case goes to trial and the decision is not rendered quickly.  The likelihood of going to trial depends on a variety of factors.  These include:

  • the size of the potential disparity between the implied market value from the assessment and the actual market value
  • the number of years involved (in many jurisdictions, appeals can be filed backward several years, or cases can drag on with multiple annual filings)
  • the potential refund the taxing authorities may be liable for
  • the taxpayer’s attitude toward the case and financial situation
  • the difference between the two sides’ appraisals
  • deferred maintenance or capital improvements at the property

The politics of any appeal cannot be overlooked.  A substantial reduction to the assessment of a large property can impact the budgets of school districts, towns and counties.  The rest of the property owners have to make that up.

With golf course and club properties, an often overlooked element is the non-realty value.  Since golf properties are typically going-concerns and sold as such, an allocation deducting out the value of tangible (carts, equipment, furniture, etc.) and intangible (business value) is in order to ensure that only the real estate is being assessed.  It’s also critical to effectively evaluate upgrades that may be required to he property, as well as accurately estimating the costs of correcting deferred maintenance items like worn and damaged cart paths, old and dated irrigation systems and dysfunctional greens and bunkers that may require rebuilding.
It is advisable to review tax assessments annually.  Even if your tax bill doesn’t increase dramatically, changes in the equalization rate or to the property can turn an assessment that seems fair into one that isn’t.
Most importantly, objectively evaluate your assessment.  It’s not unheard of for assessments to increase as a result of ill founded appeals.  I’ve seen it happen.