Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
All:
Has anyone in SC ever successfully gotten property taxes reduced on a large portfolio of properties (other than the standard 25% ATI exemption) based on the fact they were buying a "business" instead of a collection of properties?
I had a team of commercial brokers mention to me that they had regularly appealed w/ Counties in doing this but have not heard of anyone else that has done it.
For example, 100 Single Family Homes are sold for $10,000,00. The sale includes the seller's company website, company social media accounts, company for rent signs, and a small amount of construction equipment used for maintenance.
Could the buyer argue that he's paying a premium for the SFHs because of the goodwill/infrastructure included in the sale?
A portfolio that I am looking at would be jump from a 4.5MM assessed value to a 6.5MM (after the ATI exemption) and increase the taxes almost 50% and am unsure if there is a way to mitigate this.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
7y
Hey Will. I've heard stories of investors purchasing the LLC that owns the property(s) rather than purchasing the property(s) but I do not have experience with it. Title does not change hands (LLC remains the owner); so, it may not trigger reassessment (or transfer taxes in some states).
Separately, in GAAP purchase accounting, the purchase price is allocated to the assets acquired based on their fair values (market) and any excess of the purchase price over the fair value of the assets acquired is considered Goodwill. Many businesses are worth more than the value of their assets...brand, secret sauce, people, systems, etc. (i.e. Goodwill).
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
7y
@Will Gaston I have no experience with this particular situation, but it seem like you have to decided between an asset sale or stock sale.
I'v never heard of an insurance policy to limit your risk. The main way to mitigate the risk that I know of in a stock sale is having attorneys review any and all contracts that the company has used in the past to asses what liabilities exist and for how long you remain open lawsuits. Then it comes down to weighing the probability and severity of the risk vs the tax savings.