Valuing Land: The Simplest Viable Method
13 hours ago
- #land valuation
- #property tax
- #urban economics
- Many large American assessment jurisdictions treat land valuation as an afterthought, lacking robust methodologies.
- The IAAO's Mass Appraisal handbook provides minimal guidance on land valuation, offering only two paragraphs on the topic.
- Assessors need land valuation methods that are defensible, straightforward to implement, and not overly burdensome.
- A simple method for land valuation involves assigning uniform land rates within well-defined assessment neighborhoods.
- The 'Right Way™' to apply land allocation percentages ensures horizontal uniformity and better economic incentives.
- Land valuation should avoid increasing based on improvements and ensure side-by-side consistency.
- Vacant and underutilized land should be taxed more than under conventional property tax systems.
- Land value should be proportionate to desirability and usefulness, reflecting true market conditions.
- Simple methods, like distance-based valuation, can capture central value concentration but fail to account for local variations.
- Calibrating local land allocations using direct evidence (e.g., vacant sales, teardown sales) improves accuracy.
- Land size, use restrictions, shape, topography, and flood plains all impact land value and should be considered in assessments.
- Hyper-local effects require assessors to maintain updated maps and local knowledge for accurate valuations.
- Implementing a Land Value Tax (LVT) based on improved valuation methods can yield predicted economic benefits.
- The British property tax system, based on rental values, offers an alternative approach to land valuation.
- Small, incremental improvements to land valuation can significantly enhance fairness and accuracy in property taxation.