1991
Approved
by the Florida Department of Revenue.
State and local tax law taxes real property, and in most states intangible value isn’t part of it. RealAdvice® helps commercial real estate buyers pay only the taxes that they legally owe by separating non-taxable intangible value from taxable real estate at closing.
Each state defines taxable real property for itself, and in 49 states intangible value falls outside that definition. Florida is a clear example: its statute defines real property as “land, buildings, fixtures, and all other improvements to land,” and its constitution bars counties from levying ad valorem taxes, the annual taxes based on value, on intangible personal property.
Federal law uses its own definitions. For some federal purposes, such as like-kind exchanges, an intangible interest in real property counts as real property. That’s why a state and local allocation can lower state and local taxes while your federal tax basis stays the same.
The ProperTax™ Process has been reviewed by regulators and courts:
by the Florida Department of Revenue.
Upheld in the Disney rulings, including Singh v. Walt Disney Parks and Resorts U.S., Inc., 325 So. 3d 124 (Fla. 5th DCA 2020).
A Florida appeals court recognized a buyer and seller's agreed allocation for transfer tax (1701 Collins Miami Owner, LLC v. Department of Revenue, 321 So. 3d 875).
Courts in other states have reached similar conclusions. In SHC Half Moon Bay, LLC v. County of San Mateo (2014), a California appeals court held that a hotel’s intangible assets had to be excluded from its assessed value.
Separating intangible value is legal. Reporting transfer tax on an allocation that no licensed professional can defend may be treated as fraudulent under state law. Ask any provider these three questions:
01
An opinion of value is an appraisal, and appraisal is a regulated profession. Look for a state-certified appraiser, plus a credentialed accountant for the business value.
02
Federal courts and most states use the Daubert standard to decide whether an expert’s methods are reliable enough to admit. A defensible report explains every method and number.
03
Two separate reports can leave a gap that invites challenge. One report that reconciles to the purchase price closes it.
Every ProperTax Appraisal™ is signed by an MAI (Member of the Appraisal Institute) real-estate appraiser and a CPA/ABV (Certified Public Accountant, Accredited in Business Valuation) specialist through our PairedExpert™ approach.
Yes. State law defines taxable real property, and in most states intangible value such as in-place leases or business operations isn’t included. You pay only taxes that you legally owe.
Most buyers accept the full purchase price as their tax basis, and many advisors work mainly in federal tax, where the rules are different. The approach has been approved, tested in court, and taught to attorneys and accountants for years, but it only works when it’s applied before closing.
It takes credentials in appraisal, law, and accounting, all regulated professions, working on one report before closing. Few firms combine all three.
No. The ProperTax Process applies only to state and local tax (SALT). It doesn’t change your lender’s appraisal or your federal tax basis, and it’s separate from cost segregation, which is a federal income tax strategy.
Our team teaches it. We’ve presented continuing legal education (CLE) programs for The Florida Bar and for the real estate departments of law and accounting firms nationwide.