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Property Tax Issues for Construction Work In Progress: Minimizing Property Tax on CWIP

Leveraging Capitalization Policies, Establishing Grounds for Challenging Assessments on Partially-Built Properties

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, September 1, 2016

Recorded event now available

This CPE course will provide corporate tax professionals and advisers with a practical guide to the various state property tax approaches to assessments and reporting valuation on partially complete, WIP and unoccupied real estate properties.

The panel will detail the various approaches key states take to valuation and imposition of property tax on work-in-progress properties, and identify key opportunities to leverage and traps to avoid in reporting property tax and challenging assessments.

Description

A critical consideration for developers of real property is the property tax treatment of partially-completed properties. Projects with construction activity are able to report construction-work-in-progress costs (CWIP) on the project balance sheet to capitalize those costs. However, various states take different approaches as to valuation of CWIP on active projects for ad valorem property tax purposes, which provides a significant challenge for property developers and their tax advisers.

There is a lack of uniformity among taxing jurisdictions as to how partially-built properties must valued by the tax assessor on the assessment dates. While most states apply a fair market value standard, other jurisdictions specify a market value-in-use standard on the date of the assessment; still others authorize local assessors to assign a taxable value to properties under construction but do not provide authoritative guidance to the assessors on how to perform the valuation.

Developers and their tax advisers should be aware of capitalization strategies, and whether capitalized costs are included in the tax basis for property tax assessment purposes. Additionally, developers should be abreast of the jurisdiction's approach to separately assessing CWIP, and should review their work-in-progress costs prior to reporting to avoid unfavorable property tax treatment.

Listen as our experienced panel of expert property tax professionals provides a thorough and practical guide to states' approaches to property tax assessments of developments in progress.

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Outline

  1. State/Local approaches to valuing Developments under construction/work-in-progress (WIP)
  2. Timing issues in assessments
  3. Constitutional issues and challenge opportunities
  4. Steps to determine assessment standards

Benefits

The panel will discuss these and other key topics:

  • What are the various state approaches to valuing and assessing property tax on construction-work-in-progress (CIP)?
  • How do the three approaches to value – cost, sales comparison and income – apply to CWIP?
  • What strategies and avenues are available to developers to challenge tax assessments on CWIP?

Faculty

Elliott B. Pollack, Esq.
Elliott B. Pollack, Esq.
Member
Pullman & Comley

Mr. Pollack is a member of his firm’s property tax and valuation section and editor of its quarterly newsletter...  |  Read More

Benjamin A. Blair
Benjamin A. Blair

Mr. Blair concentrates his practice on state and local tax litigation, representing clients across the United States in...  |  Read More