The cost approach to value is based on the assumption that potential buyers will pay no more for the subject property than it would cost them to purchase an equally desirable substitute parcel of vacant land and construct an equally desirable substitute improvement. In this approach, the appraiser calculates the cost new of the improvements, subtracts from it accrued depreciation to arrive at an estimate of the improvement's value, and then adds the value of the land as if vacant to arrive at an estimate of the subject property's total value. It can be expressed in a formula as follows:
(RCN - D) + LV = V
RCN = Replacement/Reproduction Cost New of the Improvements
D = Accrued Depreciation
LV = Land Value, as if vacant
V = Total Property Value
Sales Comparison Approach
The sales comparison approach to value is based on the assumption that potential buyers will pay no more for the subject property than it would cost them to purchase an equally desirable substitute improved property already existing in the market place. In this approach, the appraiser locates sales of comparable improved properties and adjusts the selling prices to reflect the subject property's total value. The adjustments are the quantification of characteristics in properties that cause prices paid to vary. The appraiser considers and compares all possible differences between the comparable properties and the subject property that could affect value. Objectively verifiable market evidence should be used to determine these items. Items, which are identified as having an influence on value in the market place, are then quantified by the use of their contributory values. These contributory values then become the adjustments which are added to, or subtracted from, the selling price of the comparable property. The sales comparison approach can be expressed in a formula as follows:
SP Â± Adj = V
SP = Sale Price of a Comparable Improved Property Â± = Plus or minus
Adj = Adjustments
V = Total Property Value
The income approach to value is based on the assumption that potential buyers will pay no more for the subject property than it would cost them to purchase an equally desirable substitute investment that offers the same return and risk as the subject property. It considers the subject property as an investment and, to that end; its value is based on the rent it will produce for the owner. It can be expressed in a formula as follows:
V = I Ã· R
V = Value
I = Income
R = Rate
Using the Three Approaches
All three approaches to value are the basis for any single-property or mass appraisal "model" used by an appraiser. A "model" is defined by the IAAO, and in the Definition section of this rule, as "A representation of how something works; for purposes of appraisal, a representation (in words or an equation) that explains the relationship between value ... and variables representing factors of supply and demand." The appraisal model selected and used by the appraiser can be thought of as the formula that is mathematically processed to arrive at an estimate of value for a property. Therefore, the formulas given for the three approaches to value above could be referred to as "models". These general models of the three approaches to value outlined above can be refined and expanded through a process referred to as model specification. Model specification is the designing of a model that is based upon appraisal theory and attempts to reflect the actions of buyers and sellers in the market. Specification of a model includes choosing variables to be included in the formula and mathematically defining their relationship to each other and the property's value.
Annual Adjustments or "trending" of property values became part of Indiana's move to a market-based assessment system that began in 2002.
Trending requires assessors to research sales of properties in a particular area over the previous two years. Using that information, assessors then estimate the values of other properties in the same area to determine an assessed value.
A ratio study is a measure of the performance of a mass appraisal method. It compares the assessing official's estimate of value with objectively verifiable data. The objectively verifiable data used in the comparison comes from selling prices and single-property appraisals prepared independent of the assessment process. Sales based ratio studies are preferred because they are less expensive and are more objective than independent single property appraisals. The ratios used in assessment ratio studies are computed on individual properties by dividing the assessing official's estimate of assessed value, for the property by the sale price, or by an appraised value developed by single-property appraisal methods. If sale price was used, the ratio would be known as the assessment-sale price ratio. If appraised value was used, the ratio would be known as the assessment-appraisal ratio. The formula for an assessment-sale price ratio follows:
A/S = (AV) SP
A/S = Assessment-sale Price Ratio
AV = Assessed Value
SP = Sale Price
*This variable is excluded for non-owner occupied property
You will receive notice of your property's value in one of two ways: the county assessor may send you a notice of assessment, known as a Form 11. Otherwise, the assessed value of your property can be found with your tax bill. This document is known as the TS-1 tax comparison statement.
The appeal process begins with written notification to the local assessing official requesting an informal conference to discuss the assessment. The request should detail the pertinent facts of why the assessed value is being disputed. It should also include the parcel number, property address, property owner name and contact information. A taxpayer may only request a review of the current year's assessed valuation. Following the informal conference with the local assessing official, the assessor will make a recommendation either denying or approving the appeal. If denied, the appeal will be forwarded to the county Property Tax Assessment Board of Appeals (PTABOA) for review. If the PTABOA denies the appeal, instructions will be provided on appealing the decision to the Indiana Board of Tax Review.
To file an appeal, you must contact your local assessor in writing within 45 days of receiving the Form 11 notice or tax bill, whichever was sent earlier. (The DLGF provides a form for this purpose known as a Form 130. Otherwise, a simple letter stating your intent to appeal is sufficient.) Indiana law does not require taxpayers to submit an appraisal in order to appeal an assessment.
You will need a Sales Disclosure Form in the following instances:
* A transfer of real property interest for valuable consideration.
* Exchange for other real property ("Trade")
* Document for compulsory transactions as a result of foreclosure or express threat of foreclosure, divorce, court order, judgment, condemnation, or probate
* Documents involving the partition of land between tenants in common, joint tenants, or tenants by the entirety
* Transfer to a charity, not-for-profit organization, or government
IC 6-1.1-5.5-3 requires a party to submit the sales disclosure form to the county assessor, who is responsible for reviewing the form for accuracy and completeness. If the form is accurate and substantially complete, the county assessor stamps the form as eligible and returns it to the appropriate party for filing with the county auditor. The county assessor shall process the forms as quickly as possible.
Yes, a sales disclosure is required with the recording of a land contract. The Sales Price is the original land contract amount. Furthermore, at the time a deed is recorded to complete the land contract, the Sales Price is the original land contract amount.
No. For scanning purposes, the form must be presented on single-sided pages.
Yes. As long as all required signatures are obtained, they can be submitted in counterparts.
A copy of the Power of Attorney document must be presented and must be in good, legible condition such that the county officials can rely on it.
Yes, this type of transaction requires disclosure. Please use the special circumstances box in Part C-3 to give as much information as possible about the terms of the exchange.
The tax billing address should be the mailing address for the new owner, if different from the address of the property.