Ga Supreme Court Rules in Favor of Property Owners in Tax Credit Case

The Georgia Supreme Court has ruled in favor of property owners in a recent case concerning the valuation of affordable housing projects that receive state and federal tax credits (under 26 USC § 42, or Section 42).

The Board of Assessors’ Arguments: Following a string of court decisions and legislative changes, the Lowndes County Board of Tax Assessors sought to void statutory language that limited how properties receiving tax credits could be valued. The statutory limits, introduced in 2017, required tax assessors to compare tax credit properties to other tax credit properties when applying the sales approach to valuation, and only consider the tax credits in the income approach when they generate ‘actual income’ to the property owner. The Tax Assessors argued that the statutory limits were a violation of Georgia’s uniformity clause (that all property of the same class must be valued in the same way). They further argued that the tax credits associated with the property should be considered as income when applying the income approach to valuation, which would result in a higher valuation for property tax purposes.

The Property Owners’ Arguments: The property owners argued that the tax credits were not income, but instead offset other tax liability. As a policy matter, they argued that by counting those credits as income, the inflated tax assessment negated the benefit of the tax credits and, on a bigger scale, would threaten the viability affordable housing projects in Georgia.

The Court’s Decision: On September 23, 2019, the Georgia Supreme Court ruled in favor of the property owners: that the tax credits themselves were not “income” for purposes of property tax valuation; and that the statutory limitations on valuing tax credit property were not unconstitutional because they did not completely preclude the tax assessors from considering the tax credits and the methods themselves were not improper, unreasonable, or arbitrary.

Read the full decision here: HERON LAKE II APARTMENTS, LP et al. v. LOWNDES COUNTY BOARD OF TAX ASSESSORS, Ga. Supreme Court Case No. S19A0975.

The Take-Away: This decision helps to ensure fair property tax valuations for tax credit properties.

Georgia Scores a B+ for Property Tax Administration

A recent report by the Council on State Taxation (COST) and International Property Tax Institute (IPTI) gave Georgia a B+ grade for property tax administration, based on scores in categories including transparency, consistency, and procedural fairness.

You can access the report HERE. Skip to page 35 for a breakdown of Georgia’s score.

Georgia ties the state of Kansas for the highest grade in the US.

Fulton County and DOR Settle 2007 Digest Dispute

In July 2019, the Fulton County Board of Tax Assessors and Georgia Department of Revenue settled their dispute over Fulton County’s 2017 digest. After two years of litigation, Fulton’s 2017 assessment values and tax bills will finally be finalized.

Fulton settles with state in tax fight; homeowners won't owe

The battle boiled down to whether Fulton had the right to freeze 2017 residential property values. Thousands of homeowners can keep their wallets closed because Fulton County and the state have ended their legal battle over frozen 2017 property values, said Fulton Commission Chairman Robb Pitts.

Some back ground: In summer 2017, the Fulton Tax Assessors office issued assessment notices with many residential properties seeing significant increases. Following an uproar from homeowners, the County Commissioners (relying on a law from the 1880s concerning correcting errors in values) ordered the Tax Assessors to cancel the 2017 assessment notices and issue new notices, with residential values rolled back to the 2016 values. The Department of Revenue then refused to accept Fulton’s digest, contending that cancelling the notices was an unlawful action by the Tax Assessors.

Lawsuits followed - the Tax Assessors and Department of Revenue filed claims and counterclaims in Superior Court, which were eventually heard in late 2018. A Superior Court judge sided with Fulton County, ordering the Department of Revenue to accept the digest. The Department of Revenue appealed to the Court of Appeals.

In July 2019, citing in part the time, expense and financial burden of the litigation on residents of Fulton County, the parties reached a settlement. You can read the settlement HERE. The Department of Revenue agreed to waive certain requirements as to the 2017 digest and accept the values in exchange for assurances that the Tax Assessors would comply with Georgia law and regulations in the future, and not rely on the 1880s law again to cancel assessment notices.

Georgia's 2019 Property Tax Season Underway

Georgia property owners receive a property tax assessment notice each spring, notifying them of the assessment value of their property and an opportunity to appeal the valuation. The deadline for an appeal is 45 days after the assessment notice is issued and is printed on the top right of each notice. Because the deadline is different for each county (and can be different for properties within the county), it is crucial that property owners review their assessment notice promptly and consider whether an appeal is necessary.

Here’s an example of some of the questions that I am asked this time of year:

Property Owner: “My taxes increased by 30%! How do I appeal my taxes?”

Attorney Sorenson: You cannot appeal your taxes, but you can appeal the assessment value. Lowering the value will lower the taxes.

Property Owner: “My value went up 15%. Is that typical? Is there a cap for how much the value can increase?”

Attorney Sorenson: There is no typical increase. The Tax Assessors are responsible for determining the fair market value of each property - in other words, what the property would sell for on the open market. The amount of increase in the value may depend on the real estate market for your area. There is no cap on how much the value can increase annually.

Find more answers to property tax FAQs on my website, or call me at 404-507-6388 for a free 15 minute consult to discuss your property and options for an appeal.