News and Insights

Georgia Governor Signs Property Tax Reforms into Law

Tax Development Jun 11, 2010

Georgia Governor Sonny Perdue has signed legislation reforming the state’s property tax appraisal process, giving property owners more options and time to appeal a Notice of Assessment.

The bill, Senate Bill 346 (“SB 346”), was sponsored by Senate Majority Leader Chip Rogers, R-Woodstock, and is considered the most sweeping overhaul of Georgia’s property tax system in decades. Most of the reforms contained in SB 346 are effective January 1, 2011.

In addition to reforms to the appraisal and appeal process, the new law also clarifies that certain intangibles cannot be included when determining the fair market value of commercial real property. The provision states that a tax assessor “shall not include the value of any intangible asset used by a business, wherever located, including patents, trademarks, trade names, customer agreements, and merchandising agreements.”

Specifically excluding intangible assets in the valuation of commercial real property is an important step to ensure business enterprise value is not included in the valuation of the commercial real property where the business value is intertwined with the real property. Assessors have been inconsistent in the removal of intangible assets from the real property valuation of certain “going concern” property types such as hotels, hospitals, nursing homes, senior care facilities, etc. SB 346 will require the assessor to recognize and exclude intangible assets when determining the value of the underlying real estate to ensure that the valuation represents the value of the real property only.

The overall reform package includes more than 50 changes to current state law, including the following:

  • Every property owner must receive an annual Notice of Assessment, which guarantees a right of appeal.
  • Every Notice of Assessment must contain the estimated property tax owed.
  • The time to appeal a Notice of Assessment is lengthened from the current 30 days to 45 days.
  • Owners of non-homestead property valued at more than $1 million can opt to participate in a streamlined appeal process.
  • The property owner automatically wins any appeal when the government fails to respond within 45 days.
  • All relevant sales, including distress sales, must be included when determining fair market value.
  • Only “current use of property” can be used in determining fair market value.
  • The taxpayer must be given access to all data that a tax assessor used in determining fair market value.
  • Sales price establishes the fair market value of a property for the next tax year.

The property tax experts at Ryan served as advisors and a technical resource to the proponents of this legislation. They stand ready to assist you with the management and minimization of your property taxes in Georgia and throughout North America.