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Welcome to. “ Everything you always wanted to know about New Growth. But... were afraid to ASK ! ” . What is Allowable Tax Base Growth?. Subject to Taxation for the first time New articles of personal property Previously exempt property

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  1. Welcome to... “ Everything you always wanted to know about New Growth... But... were afraid to ASK ! ”

  2. What is Allowable Tax Base Growth? • Subject to Taxation for the first time • New articles of personal property • Previously exempt property • Taxed as a Separate Parcel for the first time • Subdivisions • Condo Conversions • Increase in Assessed Valuation over prior year due to construction activity - BUT NOT due to a Revaluation Program

  3. Example of Allowable Growth“Non-Revaluation Year” Prior FY Value L = 100,000 B = 150,000 $250,000 Current FY Value L = 100,000 B = 200,000 $300,000 Allowable Growth = $300,000 - 250,000 or $50,000

  4. Example of Allowable Growth“Revaluation Year” Adjusted Value = Prior FY Parcel Status Valued by Current FY Schedule and Tables Prior FY Value L = 100,000 B = 150,000 $250,000 Adjusted Prior FY Value L = 120,000 B = 180,000 $300,000

  5. Example of Allowable Growth“Revaluation Year” Adj Prior Value L = 120,000 B = 180,000 $300,000 Current FY Value L = 120,000 B = 240,000 $360,000 Allowable Growth = $360,000 - 300,000 or $60,000

  6. Section 40, Chapter 653 of the Acts of 1989 ALLOWABLE New Buildings Additions Buildings Removed or Destroyed NON-ALLOWABLE Condo Conversions Subdivided Land Personal Property Tax Exempt Returned to Taxation

  7. New Growth Form - LA13 Top Prior Year Values and Adjustments

  8. New Growth Form - LA13 Top Prior Year Values and Adjustments • Prior Year LA4 assessed values are reported in Column A • Report Revised and Omitted values committed in Prior Year in Column B - do not include rollback taxes • In Column C, list only those Abatements that are also reflected in current year assessed values

  9. Column D - Other Adjustments Changes between Classes • Same Value or Increase in Value: (-) old value from old class (+) old value to the new class Class 101 Current Value = $250,000 Class 130 Prior Value = $100,000

  10. Column D - Other Adjustments Changes between Classes Allowable Growth = $250,000 - 100,000 or $150,000

  11. Column D - Other Adjustments Changes between Classes • Same Value or Increase in Value: (-) old value from old class (+) old value to the new class • Decrease in Value: (-) old value from its old class (+) new value to current class

  12. Column D - Other Adjustments Changes between Classes Class 130 Prior Value = $125,000 Class 61A Current Discounted Value = $15,000

  13. Column D - Other Adjustments Changes between Classes Allowable Growth = $ 0

  14. Column D - Other Adjustments Changes between Classes • Same Value or Increase in Value: (-) old value from old class (+) old value to the new class • Decrease in Value: (-) old value from its old class (+) new value to current class • Going to Exempt: (-) old value from old class

  15. Column D Changes Needed with Aggregate Reporting Prior Year Current Year Growth = $ 50,000 Value = $250,000 Value = $300,000 = $ 0 Value = $150,000 Value = $0 (Exempt)

  16. Column D Changes Needed with Aggregate Reporting Prior Year Total Taxable Value = $ 400,000 Current Year Total Taxable Value = $ 300,000 Not... Current Value - Prior Value or - $100,000 But... New Growth is $ 50,000

  17. Column D Changes Needed with Aggregate Reporting By not accounting for Column D changes, Growth is lost or offset !

  18. New Growth Form - LA13 Bottom Current Year Reval Adjusments and Growth

  19. Column F - Revaluation or Interim Year Adjustments • Apply aggregate % change due to Revaluation or Interim Year Adjustment (derived by sampling) to Column E • Do not include properties with changes in physical condition, taxable status or unit • Sample 5% of property class or 20 parcels, whichever is greater • Sample should be representative

  20. Calculating the Reval Factor in the “Three House Town” There is no “New Growth” in this town. The only change in value is due to the revaluation of properties.

  21. Aggregate Percent Change as applied to New Growth Form (LA13)

  22. Column F - Revaluation or Interim Year Adjustments • Applyaggregate %change due to Revaluation or Interim Year Adjustment (derived by sampling) toColumn E • If actual value or % changes are known by generating a series of LA-4 reports, record percent (%) changes in Column F

  23. New Addition = $100,000 + “Comparison of LA4s” Method Entering Building Permits before Revaluation Changes Original Property Value = $300,000 Total Property Value before Revaluation Adjustment = $400,000

  24. Adjusted New Addition = $120,000 + “Comparison of LA4s” Method After Entering Revaluation Increase of 20% Adjusted Property Value = $360,000 Total Property Value after Revaluation Adjustment = $480,000

  25. For Example: 480,000 400,000 = 20% Increase “Comparison of LA4s” Method To Compute Reval % Change in Column F Divide… LA4 Value with Building Permits After Reval Changes by… LA4 Value with Building Permits Before Reval Changes

  26. LA4 Value Before Reval minus 480,000 -400,000 = 80,000 For Example: “Comparison of LA4s” Method To Compute Reval $ Change in Column F Multiply… Reval % by Column E DO NOT Subtract… LA4 Value After Reval Because… This calculates New Growth using Prior Tables or Schedules!!

  27. “Comparison of LA4s” Method Using incorrect Reval $ Adjustment … Using correct Reval % Adjustment…

  28. Column F - Revaluation or Interim Year Adjustments • Apply aggregate % change due to Revaluation or Interim Year Adjustment (derived by sampling) to Column E • If actual value or % changes are known by generating a series of LA-4 reports, recordpercent (%)changes inColumn F • If actual growth is known by parcel listing (Column I), work backwards to compute Column F values and %

  29. Determining New Growth and Levy Limit Increase • Total Adjusted Value Base from Prior Year is calculated in Column G by adding Columns E and F • Proposed Values in Column H are taken from the Current Year LA4 • New Growth Valuation in Column I is calculated by subtracting the Prior Year Adjusted Values from Current Year Proposed Values (Col H - Col G) - EXCEPT FOR PERSONAL PROPERTY GROWTH

  30. Personal Property Growth • New Accounts • New Items on Existing Accounts • Utility Values - Locally Assessed and DOR Assessed Telephone and Pipelines • Do Not use the difference in value from year to year - YOU MAY LOSE GROWTH

  31. Amended New Growth - LA13A

  32. Amended New Growth - LA13A • Only one report can be submitted each Fiscal Year • Submit before setting of Tax Rate for next fiscal year • Report allowable growth inadvertently omitted • Consists of “Omitted or Revised Assessments” that result in increase in assessed value of parcel or personal property item over prior year • Filling in the LA13A Form requires: • Reporting by Class totals • Using Prior Year’s Tax Rate

  33. Common Errors on the LA-13 • Values in Column B do not correspond to Omitted and Revised Assessment Report or include roll back taxes • Column C (Abatements) lists tax dollars instead of valuation dollars • Negative values in Columns B or C • Column D is blank or improper adjustments are made • Reval adjustment Column F incorrectly calculated • Personal Property growth is too low or not reported • Negative growth in Column I for a major class • Either (+) or (-) signs used incorrectly • Common sense checks skipped

  34. Assessment Classification Report - LA4

  35. DORReview Process of LA-4 Tax Recap Program Requirements • All parcel counts and assessed values are reported for each property type - including zero (0) values • Name of community generates values for 505 and 506 classes which can be changed for those communities that have adopted the “personal property exemption” • Exempt value reported

  36. DORReview Process of LA-4 • Comparison of assessedvalues and parcel counts for each property type, from previous to current year

  37. DORReview Process of LA-4 • Chapter land classes (600s, 700s, 800s) - report discounted land values only

  38. DORReview Process of LA-4 • DOR valued utilities (505,506) and locally assessed utilities (504) certified in revaluation year

  39. DORReview Process of LA-4 • Submission of Interim Year Adjustment Form now required for all non-certification communities

  40. DORReview Process of LA-4Summary • Comparison of assessed values and parcel counts for each property type, from previous to current year • Chapter land classes (600s, 700s, 800s) - report discounted land values only • DOR valued utilities (505,506) and locally assessed utilities (504) certified in revaluation year • Submission of Interim Year Adjustment Form for all non-certification communities

  41. DOR Review Process of LA-13 • Total growth compared to community’s three- year average • Individual major classes - residential, commercial, industrial, and personal property - also compared to three-year average

  42. DOR Review Process of LA-13 • Estimated growth due to construction of new homes (101’s)

  43. DOR Review Process of LA-13 • Analysis of previous year’s LA-13s for entire state determines normal % ranges for: • Entries in columns B,C,D

  44. DOR Review Process of LA-13 • Analysis of previous year’s LA-13s for entire state determines normal % ranges for: • Growth according to type of community: • Large Urban - High range - 135% • Small Urban - Mid range - 125% • Suburban - Low range - 115% • Rural Residential - Mid range - 120% • Economic Center - Mid range - 120% • Resort - High range - 130%

  45. DOR Review Process of LA-13 • Analysis of previous year’s LA-13s for entire state determines normal % ranges for: • Growth according to type of community: • Large Urban - High range - 135% • Small Urban - Mid range - 125% • Suburban - Low range - 115% • Rural Residential - Mid range - 120% • Economic Center - Mid range - 120% • Resort - High range - 130%

  46. DOR Review Process of LA-13 • Analysis of previous year’s LA-13s for entire state determines normal % ranges for new growth as a % of the community’s total value: • Large Urban 1.80% • Small Urban 1.90% • Suburban 2.25% • Rural Residential 2.10% • Resort 1.95% • Economic Center 2.00%

  47. DOR Review Process of LA-13 Summary • Total Growth compared to community’s 3 Year Average • Individual major classes compared to 3 Year Average • Estimated Growth due to construction of new homes • Analysis of previous LA-13s determine normal ranges: • Entries in columns B,C,D • Growth according to type of community: Large and Small Urban, Suburban, Rural Residential, Economic Center and Resort • New growth as a % of the community’s total value

  48. Reporting Requirements and Procedures • Finalize Assessments • Non Certification Year - submit LA4 and Interim Year Adjustment Report with LA13 New Growth Report to BLA via the “Automated Recap” program • Certification Year - Final Certification must be granted before New Growth can be approved • Submit New Growth (LA13) and Amended Growth for prior year (LA-13A) for approval by BLA via the “Automated Recap” program • Bureau of Accounts increases the Levy Limit accordingly and approves the Tax Rate

  49. This Concludes ... The Workshop on “The Infamous LA13” and Automated Recap

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