PROPERTY VALUATION


When a succession is undertaken property must be valued. This does not necessarily mean employing an appraiser. The list of assets submitted to the court should contain the fair market value. If one hired several appraisers, it would be rare for each appraiser to return the identical value for a piece of property, but they should be within a few thousand on a moderately priced piece of real estate.

Many clients want to use the local Tax Assessor’s value. This is a mistake for a number of reasons, but principally because this value is usually low. Rural land may be especially susceptible to a low assessment because it may be assessed as timberland or agricultural land. (For an explanation and how these particular assessments work click the link available further down on this page.)

I explain to my clients that the pleading submitted to the court listing the value of assets should in most cases list the highest fair market value. This will save capital gains tax for the client who sells property. The client who is an heir to the deceased person is entitled to a step up in basis which greatly assists the client who sells property.

It works this way.

 

EXAMPLE:

Daddy Jones buys 40 acres in 1966 for $5,000. (His basis is $5,000)

Daddy Jones dies in 2013.

In 2013 the 40 acres is valued at $120,000.

Heir Jones, Jr. is entitled to inherit the 40 acres.

A succession is done and the 40 acres is listed at a value of $120,000.

Heir Jones, Jr. has a new “basis” which is stepped up to $120,000, not the $5,000 originally paid by his father. This is a tremendous benefit to the heir.

In 2014 Heir Jones, Jr. sells the 40 acres for $120,000.

Heir Jones does not have to pay capital gains tax on $115,000 (the difference between the value at which property was originally acquired for, $5,000, and the $120,000 that Heir Jones, Jr. sold it for) because when Heir Jones’ father died the law allows a new value to be substituted as Heir Jones, Jr.’s basis for any future sale.

Heir Jones, Jr. will only pay capital gains if he sells for more than $120,000 and the expenses of the sale do not equal or exceed the difference between the selling price and the $120,000. Expenses may include, for instance, the realtor’s commission.

Based on this example, you can appreciate how important it is not to under value assets, such as real estate. You could cost yourself capital gains tax.

For information on how your taxes are assessed and the different types of assessments, the Lafayette Tax Assessor, Mr. Conrad T. Comeaux, has put together a superb booklet which you may download here:

http://www.lafayetteassessor.com/TopicsPDFs/Louisiana%20Property%20Tax%20Basics%20booklet%203.pdf


VALUATION FREEZE ON ASSESSED VALUE
a/k/a “Senior Freeze”

It is amazing how many of my first time clients are not taking advantage of this senior advantage.

A perk to Senior Citizens is that the assessed value of your homesteaded property (your home) may be frozen so that as properties values increase, yours will not. This results in fewer property taxes for you.

To be eligible for this valuation freeze you must meet ONE of the following requirements:

  • Totally Disabled
  • A partially disabled veteran (at least 50%)
  • Be 65 years or older on or before January 1, 2013
  • Widows of military spouse killed in action, MIA or POW

and ALL of the following requirements:

  • Claim a Homestead Exemption
  • Have a 2012 adjusted gross income of $69,463 or less as required on your federal income tax return (if husband and wife file separately, the combined income for both must be $69,463 or less)
  • Provide proof of age and income
  • File a permanent application with the Assessor's Office

RAPIDES PARISH TAX ASSESSOR

Richard “Rick” Ducote, Jr.

701 Murray Street Alexandria, LA 71309

(318) 448-8511

Mr. Richard “Rick” Ducote, Jr. is the Rapides Parish Tax Assessor’s office. Mr. Ducote’s office renders exceptional service to our seniors. The requirements for gaining this “Senior Freeze” can be downloaded here:

http://www.rapidesassessor.org/forms/Special%20Assessment%20Level%20Freeze%20Flyer.pdf

As I have strong ties to Grant Parish, where my mother was born and reared, and many of you are clients with property in Grant Parish, I include our neighboring parish’s tax assessor information. I have also found this office to be very pleasant to work with and accommodating to seniors.

GRANT PARISH TAX ASSESSOR
Mr. Walker Wright, CLA

200 Main Street
Colfax, LA 71417

(318) 627-5471

 

The LOUISIANA TAX COMMISSION (225.925.7830) regulates and audits property tax rolls. www.latax.state.la.us/