Montgomery Business Enterprise/Going-Concern Appraisals
Business Enterprise Appraisals
Business Enterprise/Going-Concern Market Value = Real Property + Intangible Assets + Personal Property
Atlas Valuation, LLC specializes in real property appraisal with a business component, which are often called Business Enterprise or Going-Concern appraisals. These real property appraisals are typically easily identifiable due to the real property being associated with a business operations. Examples include: hotels, convenience stores, and senior housing. Some property types have a business enterprise component that are not as identifiable, which include IRS Section 42 LIHTC apartment complexes or USDA Rural Development Apartment complexes. Either way, all of these property types have intangible assets associated with their operations, which can include business value, tax credits, work force, or branding, for example.
Business Enterprise/Going-Concern valuations are a complex process that require an appraiser with specialized experienced in the separation of real property from intangible assets. Not only is property separation or real property from intangible property a requirement for FDIC-insured appraisals or the Interagency Banking Guidelines, this is an essential process for establishment of taxable values or assessments for taxation. Most often, real estate tax assessors have very minimal experience in complex Business Enterprise assignments. Thus, the taxable value can often exceed the market value of the real property. Real Estate taxation is not supposed to include any personal property or intangible assets with the assessed value. This can result in double taxation by real property assessors whereby the taxable value is too high. Thus, an appraiser with extensive experience in business enterprise appraisals is essential for tax appeals to ensure that only real property or that any intangible assets are excluded from real property taxation.
The Separation of Real Property and Business Value
Atlas Valuation, LLC goes above and beyond a traditional scope of work to separate the real property from any intangible assets or business value. Traditionally, most appraisers only do a Cost Approach, which is compared to the Income and Sales Comparison Approach to allocate values. The Appraisal Institute teaches that this is an appropriate method for allocation of real property and intangible values. However, Atlas Valuation, LLC takes the process much further and uses modeling to ensure that the values are allocated appropriately. This process makes sure that business values and intangible values are appropriately balanced and supported based upon market indications.
IRS Section 42 LITHC/USDA Rural Development Apartment Complexes
Atlas Valuation, LLC has extensive experience in the valuation of IRS Section 42 Low-Income Tax-Credit Housing and USDA Rural Development apartment complexes. These programs are designed to provide quality and affordable housing within areas that are not financially feasible for new construction. Thus, real property owners and developers are granted either tax credits or favorable financing to offset development construction costs. This creates huge valuation issues that require appraisers with extensive experience in the valuation of low-income tax credits or favorable financing. Not only is it required for separate valuation for lending purposes with FDIC and the Interagency Guidelines, but any intangible assets are not subject to real property taxation, which includes tax credits and favorable financing. Atlas Valuation, LLC has extensive experience in tax appeals and litigation involving IRS Section 42 and USDA Rural Development Apartment Complexes. Often, real estate tax assessors have little experience is separation of real property from intangible assets and simply provide a Cost Approach for establishment of taxable value. However, this will most often greatly exceed the market value of the real property.