Section 50IAC29-3-7. True tax value and zero or negative assessments

   Where there is a negative net operating income, therefore, producing an assessed value of zero (0), the assessing official shall first ensure that all income and expense information is accurate. Where, despite a review of the information, the assessed value is still negative or zero (0), the assessing official shall determine the market value-in-use that results in a liability of five percent (5%) of the adjusted gross income, as illustrated by the following example:

Assuming a 12% Overall Capitalization Rate

Assuming $300,000 in Expenses

Gross Income = $500,000

Less Golf Cart Income = <$150,000>

Less Pro Shop Income = <$50,000>

Adjusted Gross Income = $300,000

Less Expenses = <$300,000>

Net Operating Income = $0

Multiply Adjusted Gross Income by 5% = $300,000 × 5% = $15,000

Divide above result by 12% Overall Capitalization Rate = $15,000/12% = $125,000 Assessed Value

(Department of Local Government Finance; 50 IAC 29-3-7; filed Aug 30, 2012, 2:00 p.m.: 20120926-IR-050120274FRA)