DOCSLIB.ORG

Multi-Family Complexes: (Apartment and Condo)

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Multi-Family Complexes: (Apartment and Condo) ADJUSTING TODAY Adjusters International Disaster Recovery Consulting EDITOR’S NOTE For millions around the world, apartment or condominium living brings a dimension of simplicity and freedom to their lives not typically found in traditional home ownership. Maintenance issues, and the desire and ability to enjoy flexible, mobile lifestyles—including having a dwelling in more than one location—continue to make apartment and condo living more popular than ever. But while simplicity may be one of the benefits of this lifestyle, another aspect that must not be oversimplified is the insurance program that protects the parties and properties involved. In fact, given the myriad conditions, relationships and exposures that can exist with multi-family complexes, making sure the right insurance program is in place merits even more foresight Multi-Family Complexes: and planning than arranging a conventional homeowners policy. (Apartment and Condo) In this issue of Adjusting Today, insurance expert Paul O. Dudey An In-Depth Look at Insuring the takes an in-depth look at this important but often inadequately Many Exposures and Losses addressed subject, including the insurance risks and needs that should be considered by those By Paul O. Dudey, CPCU who own, manage or reside in cooperative or rental apartments, There are three common types This article will describe several of or condominiums. He discusses the differences between the three, of apartment complexes: rental these important differences, the various risks to which they apartments, condominiums and and will discuss in considerable are exposed, and the coverages available to protect them. cooperative apartments. As to depth how the three types of risk and insurance matters, all apartment complexes should be In addition to Mr. Dudey’s article, veteran public adjuster Scott three have many characteristics insured, as well as what kinds of Davidson draws on his extensive in common, but there are also losses may be encountered. We background to offer a companion piece focusing more closely on one important individual differences will also offer some helpful advice of the most difficult types of losses in the precise details of ownership, on loss prevention or control. to detect and settle, but one to which many multi-family complexes owner’s and resident’s ownership are exposed—hail storm damage. interest and legal rights and Rental Apartments This is important and informative reading for anyone with an interest responsibilities, and the way they These are defined as multi-resident in these types of properties. are insured for property loss, legal buildings owned by an individual, —Sheila E. Salvatore, Editor liability, and other loss exposures. partnership or corporation, with ADJUSTERSINTERNATIONAL.COM 1 ADJUSTING TODAY all or most of the apartment units ownership by many years, and rented to others. The rental usually was and still is found principally involves a lease of the premises, in large urban areas such as spelling out the conditions, New York City and Chicago. privileges, and responsibilities of The individual residents of the the owner and the residents. “co-op” hold life tenancy to their apartments and own stock in the Condominiums corporation that owns the Condominiums are a relatively property, usually in the same new form of apartment ownership, proportion to the total value of having been created by the the project that their unit’s value passage of condominium laws or area bears in relationship to the in various states in the 1960s total value or area of the complex. and having gained prominence Management of the property is as a preferred type of apartment usually handled by a management ownership in the 1970s and 1980s. firm hired by the co-op owners or Two kinds of ownership are by an association elected by the involved—individual unit owners owners. As with condominiums, hold title to the space in which the individual owners may lease they live, and unit owners in out or sell their unit, but in some common—usually as compulsory cases only with approval of the members of a condominium association. association—own the common property, often including the entire Insurable Property Exposures shell of the apartments with the Each of these three types of individual unit owner owning apartments have many insurable only the interior of the unit up to property exposures, but with some the interior of the exterior “bare important differences that must be walls,” usually including the floor considered in arranging insurance. and ceiling as well. All call for building management to purchase insurance on the The details of ownership, resident occupied buildings as well privileges and responsibilities of as any other property such as a the unit owner and the association clubhouse, swimming pool, health of unit owners are described in facility, tennis court, golf course a document in most states called and related personal property, etc., the condominium declarations, or that may require insurance. in a companion document—the condominium bylaws. The unit Personal property owned owners have the right to rent out by residents is usually the or sell their units to someone else, responsibility of the residents although the association may in to insure, but there may also be some cases screen the rental or sale personal property owned by the and hold the right of first refusal apartment building owners—and if the prospective renter or buyer this should be included with the does not meet their standard of building insurance. Standard ownership. building coverages (such as provided by the Insurance Services Cooperative Apartment Office [ISO]) will include a This type of common ownership of description of personal property apartments predates condominium items that may be included 2 ADJUSTINGTODAY.COM ADJUSTING TODAY Additional Coverages– coinsurance applying, but applies Coverage Extensions only when 80 percent or higher In addition to the basic buildings coinsurance or equivalent is used and personal property coverages, on the basic property insurance. most forms also provide a number of additional coverages and Covered Causes of Loss coverage extensions. Below is a Three levels of choice of covered summary of these as provided by causes of loss (formerly referred the ISO form: (Refer to the form to as “perils insured against”) are itself for various limitations and generally available, although there exclusions found in these sections.) are considerable variations in the details of coverage from one 4a) Debris removal, pays up to insurer to another. Care should 25 percent of the amount of the be taken to compare the list loss (not exceeding the limit of of covered and excluded or insurance for the combined unmentioned causes of loss when loss) plus $10,000 (can be comparing coverage choices. increased); 4b) Preservation of property Basic coverage includes only a removed to protect it from loss limited group of covered causes or threatened loss for up to of loss—fire, lightning, wind and 30 days; hail (excluded in some hurricane- 4c) Fire department services prone areas), explosion, damage by charges, up to $1,000 with no aircraft or vehicles, and riot or civil deductible; commotion, and usually vandalism 4d) Pollutant clean-up and or malicious damage, along with removal, up to $10,000 sprinkler leakage for buildings (can be increased); with automatic sprinklers, sinkhole as building at the usually lower 5a) Newly acquired or constructed collapse (but not mine subsidence), building insurance rate. Other property, for 30 days or until and volcanic action. Although the personal property not so listed policy expires if earlier, least expensive form, this form must be covered, either specifically $250,000 buildings, $100,000 should be avoided as there are or under blanket coverage with business personal property; too many other perils not covered the buildings, using the personal 5b) Personal effects and property here that can also produce severe property insurance rate. of others, up to $2,500; loss. Its most common use is as a 5c) Cost of research, valuable means for underwriters to provide Generally, insurance with at least papers and records, up to minimal coverage for substandard an 80 percent coinsurance clause $2,500 (can be increased); properties. (unless replaced by an agreed 5d) Property off premises (except value clause) is required, or if in or on a vehicle, in custody Broad Form coverage expands multiple buildings are involved, of insured’s salespeople, or the list of causes of loss to include blanket insurance for 90 percent at a fair or exhibition), up to falling objects, weight of snow, ice of current value is suggested. Also $10,000; or sleet, and water damage (but recommended—especially with 5e) Outdoor property, as listed, not flood or overflow of natural buildings more than one or two against limited listed causes of bodies of water, or sewer backup) years old—is replacement cost loss for no more than $1,000 and, as “additional coverages,” coverage, which covers the cost ($250 per tree, shrub, or plant) glass breakage and a limited form of replacing new for old, with per occurrence. of collapse. no deduction for depreciation as would be the case with actual cash Each of items 5a through 5e is Special Form coverage applies to value (ACV) coverage. additional insurance with no any risk of direct physical loss not ADJUSTERSINTERNATIONAL.COM 3 ADJUSTING TODAY otherwise excluded or limited. specifically name individual 3) Flood While theoretically the broadest causes of loss, except for a list of Coverage is available only coverage available and the most “specified causes of loss.” through a separate federally expensive, this form can be a sponsored flood insurance trap for the unwary. There are a If you are considering use of the program or by a few specialty number of versions of this form Special Form, be sure to make a underwriters, mainly in the with substantial variation in the line-by-line comparison of the surplus lines markets.
Load more

Recommended publications
  • Farm Building Rent Presentation
    Building Rent What’s a Fair Value? Ken Bolton UW‐Extension Center For Dairy Profitability Arriving at a Fair Rental Value • For whom? • Landlord? • Renter? • Both? – High/Low approach Arriving at a Fair Rental Value Landlord Renter • High • High – Out –of‐pocket costs, PLUS – Full ownership cost – Annual ownership costs • Low • Rate of return on Investment – Less than • Low (Out Of Pocket) • Taxes – Taxes • Insurance – Insurance • Repairs – Repairs? Arriving at a Fair Rental Value • Full ownership cost – Actual costs for • Taxes‐ (1‐1.5% of building’s market value) • Insurance‐ (0.5‐1.0% “) • Repairs‐ (1.0‐1.5% “) ‐PLUS‐ • Capital Recovery Charge (CRC) – Depreciation (0‐5%) – Interest on investment‐ CD rate Arriving at a Fair Rental Value • What’s a Building Worth? – Market value – Insured value – Assessed value – Appraised value – Replacement cost MINUS depreciation – Contributory value • Farm value‐land value Real Estate Tax Bill Arriving at a Fair Rental Value • “Improvements” – House‐ 4 bedroom, finished basement built 1996 – Shop‐ 40’ X 60’, 4‐ season built 2004 – Pole barn ‐ 40’ X 60’ built 2004 Arriving at a Fair Rental Value • “Fair” market Value • Using The Real Estate Tax Bill – Assessed value of Improvements ‐ value of improvements not to be rented= value building to be rented – $274,700 – ($214,700 house + 50,000 shop) = • $10,000 pole barn – 40’ X 60”= 2400 ft.2 = $4.17/ft.2 Arriving at a Fair Rental Value • Real Estate Tax Bill, continued – $10,000 building value X 2.5% (taxes, insurance, repairs) = • $250 – $10,000 building value X 3% (depreciation) = • $300 – $10,000 building value X 1% (hopeful CD rate) = • $100 – Total ($250 + 300 + 100) = • $650/year/ $54.17/month (add value of technology) • $250 min.
    [Show full text]
  • Long-Term Leases: Rent Reset Analysis
    Peer-Reviewed Article Long-Term Leases: Rent Reset Analysis by Tony Sevelka, MAI, SRA, AI-GRS Abstract A provision for resetting rent is often found in long-term leases, with the objective being to periodically analyze the value attributed to the leased real estate. The property rights to be valued at each rent reset depend on the language of the lease, especially the rent reset clause. The lack of specificity associated with use of the term market value has led to questionable application of the term in rent resets. Inconsistent interpretations of a lease can lead to divergent opin- ions of value. Sometimes rent resetting provisions have no connection to the terms of the lease or the actual property rights; this may result in situations where it is difficult to apply conventional appraisal methods. This article summarizes and discusses a sample of rent reset cases and explores creative valuation solutions to rent reset valuation challenges. Introduction rent reset is dictated by the provisions of the lease, and the lease usually calls for arbitration if Rent reset clauses are typically found in long- the landlord and tenant are unable to negotiate a term leases for land (unimproved or improved).1 new rent within a specified time frame. A lease is “a contract in which the rights to use A rent reset analysis for a land lease has the and occupy land, space, or structures are trans- same objective as for a space lease—quantifying ferred by the owner to another for a specified a new rent—unless the land lease only calls for a period of time
    [Show full text]
  • 1400 Co Ownership and Condominium
    1400 CO-OWNERSHIP AND CONDOMINIUM Marshall E. Tracht Associate Professor, Hofstra University School of Law © Copyright 1999 Marshall E. Tracht Abstract Co-ownership refers to legal relations in which two or more entities have equal rights to the use and enjoyment of property. Co-ownership relationships may satisfy the preferences of some owners, and predefined categories of co-ownership, as opposed to contractually defined relations, may allow parties to satisfy these preferences at relatively low cost. However, shared ownership results in coordination and externality problems, which the law attempts to mitigate in numerous ways, including judicial oversight of ‘reasonableness’ (as in the law of waste) or fiduciary duties; ending the co-ownership relation (through the right of partition) or providing rules that seek to optimize the joint decision-making process (such as compulsory unitization). A major area of growth in shared ownership is in condominium developments, where entities own some property individually, while co-owning common facilities. This permits parties to take advantage of economies of scale and the joint provision of common goods. Condominium arrangements are governed by a combination of contract, statute and judicial law, and typically include democratic decision-making structures intended to minimize the sum of decision-making costs (gathering information, voting, and bargaining) and the cost of erroneous decisions. JEL classification: K11, P32, H41 Keywords: Cotenancy, Co-ownership, Condiminium, Cooperative, Communal Ownership 1. Introduction Co-ownership refers to legal relationships that entitle two or more entities to equal rights to the use and enjoyment of property. Although it most often arises in the context of real property, co-ownership may apply to any type of property.
    [Show full text]
  • 1 Property Taxes and Residential Rents Leah J. Tsoodle & Tracy M
    Forthcoming. Journal of Real Estate Economics, 2008, 36(1), pp. 63-80. Property Taxes and Residential Rents Leah J. Tsoodle & Tracy M. Turner Abstract. Property taxes are a fundamental source of revenue for local governments, comprising 73% of local government tax revenue in the United States. In this paper, we empirically investigate the impact of residential property taxes on residential rents. Using data from the American Housing Survey and the National League of Cities, we estimate numerous specifications of a hedonic rent equation with comprehensive unit-level, neighborhood-level and city-level controls. We find that a one standard deviation increase in the property tax rate raises residential rents by roughly $400 annually. ______________________ Tsoodle: Coordinator, State of Kansas Land Use-Value Project. Turner: Department of Economics, Kansas State University. We thank Allen Featherstone, John Crespi, Bryan Schurle, Dong Li, and session participants at the American Real Estate and Urban Economics May 2005 conference for valuable feedback. We thank Matt Gardner for a helpful discussion, Jack Goodman for generously calculating some statistics for us, and two anonymous reviewers for helpful comments. We especially thank Editor Coulson for his insights and guidance. Tsoodle gratefully acknowledges funding from the U.S. Department of Housing and Urban Development Early Doctoral Research Program. 1 I. Introduction Property taxes are a fundamental source of revenue for local governments, comprising 73% of local government tax revenue in the United States (Statistical Abstract, 2006), and an extensive literature examines their economic impacts. By extending and empirically testing the Tiebout (1956) model, much of this research investigates the extent to which property taxes and public services are capitalized into house prices, and whether household mobility and local government competition can lead to an efficient provision of local public services.
    [Show full text]
  • Condominium: a Reconciliation of Competing Interests?
    Vanderbilt Law Review Volume 18 Issue 4 Issue 4 - A Symposium on Small Article 7 Business Symposium on Small Business 10-1965 Condominium: A Reconciliation of Competing Interests? James C. Clark Follow this and additional works at: https://scholarship.law.vanderbilt.edu/vlr Part of the Property Law and Real Estate Commons, and the Tax Law Commons Recommended Citation James C. Clark, Condominium: A Reconciliation of Competing Interests?, 18 Vanderbilt Law Review 1773 (1965) Available at: https://scholarship.law.vanderbilt.edu/vlr/vol18/iss4/7 This Note is brought to you for free and open access by Scholarship@Vanderbilt Law. It has been accepted for inclusion in Vanderbilt Law Review by an authorized editor of Scholarship@Vanderbilt Law. For more information, please contact [email protected]. NOTES Condominium: A Reconciliation of Competing Interests? I. INMRODUCTION As Americans have migrated to urban areas, the suburbs have grown at an astounding pace, principally by means of single home sub- divisions. Of necessity, this march to the suburbs must cease at some point and people will begin to return to the central city and its close- lying peripheral areas if for no other reason than to lessen the heavy economic burden resulting from man-hours wasted in commuting great distances. Often the alternative to the suburban home is an apartment in the city. Apartment renting, however, runs counter to a deeply ingrained American tradition of individual home ownership, a tradition encouraged by favorable tax consequences.' It seems only 1. The homeowner may deduct state and local, and foreign real property taxes, INT.
    [Show full text]
  • Business Income – Landlord As Additional Insured (Rental Value)
    POLICY NUMBER: COMMERCIAL PROPERTY CP 15 03 06 07 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. BUSINESS INCOME – LANDLORD AS ADDITIONAL INSURED (RENTAL VALUE) This endorsement modifies insurance provided under the following: BUSINESS INCOME (AND EXTRA EXPENSE) COVERAGE FORM BUSINESS INCOME (WITHOUT EXTRA EXPENSE) COVERAGE FORM SCHEDULE Description Of Rented Premises: Name Of Additional Insured: Mailing Address Of Additional Insured: Applicable Business Income Causes Of Coverage Form Coinsurance Loss Form (Enter Form Number) Limit Of Insurance Percentage $ % Endorsements, If Any, Supplementing Or Restricting The Covered Causes Of Loss With Respect To The Coverage Provided Under This Endorsement: Information required to complete this Schedule, if not shown above, will be shown in the Declarations. A. The person or entity identified in the Schedule is C. With respect to the coverage provided under this insured for loss of "Rental Value", up to the Limit endorsement, the definition of "Rental Value" is of Insurance shown in the Schedule. Such cover- replaced by the following: age applies in accordance with all terms of Busi- "Rental Value" means the: ness Income – "Rental Value" Coverage under the applicable Business Income Coverage Form, and 1. Net income that would have been earned as all conditions in the Common Policy Conditions rental income from tenant occupancy of the and Commercial Property Conditions, except as premises described in the Schedule, as fur- otherwise provided in this endorsement or other nished and equipped by the Additional Insured; applicable endorsement. and B. The Causes Of Loss Form shown in the Schedule 2. Amount of continuing normal operating ex- applies to the coverage provided under this en- penses which are the legal obligation of the dorsement.
    [Show full text]
  • Real Property Co-Ownership and Mineral Developments
    University of Tulsa College of Law TU Law Digital Commons Articles, Chapters in Books and Other Contributions to Scholarly Works 1997 A Tale of Two Owners: Real Property Co- Ownership and Mineral Developments Marla Mansfield Follow this and additional works at: http://digitalcommons.law.utulsa.edu/fac_pub Part of the Oil, Gas, and Mineral Law Commons Recommended Citation 43 Rocky Mtn. Min. L. Inst. 20-1 (1997). This Article is brought to you for free and open access by TU Law Digital Commons. It has been accepted for inclusion in Articles, Chapters in Books and Other Contributions to Scholarly Works by an authorized administrator of TU Law Digital Commons. For more information, please contact [email protected]. --- STITUTE 19-60 ' gas might not attract as Chapter 20 :re stated to be a penalty A TALE OF TWO OWNERS: zlements of the definition REAL PROPERTY GO-OWNERSHIP AND MINERAL DEVELOPMENT y. If Shipper delivers Unautho- r's System, then such Unautho- ned by, the Unauthorized Gas @MarlaE. Mansfield it of Policies and Procedures. Professor of Law The University of Tulsa, College of Law t doesn't meet all of the Tulsa, Oklahoma r scheduled gas. Because to that unauthorized gas statement of Policies and Synopsis :opy of that Statement of .e agreement is signed, Q 20.01 Introduction ;o revise it later, without !asily make unauthorized [I] The Concept of Owning Together n those specified in the [21 Inherent Problems with Concurrent Ices. A general require- Ownership acts might limit Gather- Q 20.02 Tenants-in-Common and Non-Mineral [re
    [Show full text]
  • Apartment | Select | Ebrochure
    Apartment CORE COVERAGE HIGHLIGHTS Travelers Apartment business • Employee dishonesty: General liability highlights – Coverage is included up to $25,000 (with an option General liability coverage protects you against claims for owners policy offers an to cover property managers as employees). Limit may damages because of bodily injury or property damage to affordable way for you to be increased others resulting from your business operations. • Equipment breakdown: • General liability limits of $1 million per occurrence/ obtain property and liability – Coverage for equipment breakdown is included within $2 million aggregate are standard for Apartment Pac and applicable limits Apartment Pac Plus with an option for higher limits of insurance. This policy includes – Diagnostic equipment, power-generating equipment $2 million per occurrence/$4 million aggregate available key coverages that are important and production equipment are limited to $100,000 for for Apartment Pac direct damage. Limit may be increased • Bodily injury and property damage liability – Service interruption of water, communication or power to any business, and also offers • Medical payments for $5,000 per person supply services is covered from a covered breakdown (when business income and extra expense is covered) • Damage to premises rented to you is included up to additional business-specific $300,000. Limit may be increased • Newly acquired or constructed buildings: options that are important for • Host liquor liability – Coverage is provided for newly acquired or constructed any apartment owner. buildings up to $500,000 for up to 180 days • Limited worldwide coverage • • Ordinance or law coverage: Personal and advertising injury Property highlights • Premises liability – Coverage is included for a combined limit of $25,000 at Property coverage covers your building and business personal each described premises.
    [Show full text]
  • In the United States Court of Federal Claims the National
    IN THE UNITED STATES COURT OF FEDERAL CLAIMS THE NATIONAL APARTMENT ) ASSOCIATION, DARBY DEVELOPMENT ) COMPANY, INC., GWR MANAGEMENT, ) Case Number LLC, MCLEAN INVESTMENTS, LLC, ) ________________________________ SHANDER INTERNATIONAL, LLC, ) ) Plaintiffs, ) COMPLAINT ) v. ) ) THE UNITED STATES OF AMERICA, ) ) Defendant. ) ) Plaintiffs (“Plaintiffs”), by and through their undersigned counsel, bring this Complaint against the United States of America (“Government”), and in support state and allege as follows: I. NATURE OF THE ACTION 1. On September 4, 2020, the Centers for Disease Control and Prevention (“CDC”), a Government agency, issued a nationwide order entitled “Temporary Halt in Residential Evictions to Prevent Further Spread of COVID-19” (the “CDC Order”). The CDC Order effectively prohibits property owners from evicting tenants of residential rental properties who are delinquent or in default on their rent payments, contrary to the property owners’ legal, contractual, and constitutional property and other rights. The CDC Order has been extended multiple times and will be effective by its terms until at least July 31, 2021. The CDC Order has subjected property owners nationwide, over their objection, to an extended Government-authorized physical invasion, occupation, or appropriation of their private property by third parties without compensation. 2. Under settled constitutional law, the right to exclude is a fundamental element of property rights and falls within the category of interests that the Government cannot take without just compensation. As a result of the CDC Order and their consequent inability to exercise their constitutional property rights and contractual rights, property owners in the United States have suffered enormous economic consequences. Without limitation, while continuing to incur all costs of ownership, they have been unable to evict non-rent-paying tenants from rental units and to generate income by leasing those units to rent-paying tenants.
    [Show full text]
  • Taxation of Owner-Occupied and Rental Housing
    Working Paper Series Congressional Budget Office Washington, D.C. Taxation of Owner-Occupied and Rental Housing Larry Ozanne Congressional Budget Office [email protected] November 2012 Working Paper 2012-14 To enhance the transparency of the work of the Congressional Budget Office (CBO) and to encourage external review of that work, CBO’s working paper series includes both papers that provide technical descriptions of official CBO analyses and papers that represent independent research by CBO analysts. Working papers are not subject to CBO’s regular review and editing process. Papers in this series are available at http://go.usa.gov/ULE. The views expressed in this paper are the author’s and should not be interpreted as CBO’s. This paper is preliminary and is circulated to stimulate discussion and critical comment. David Splinter and Theodore Figinski helped design and implement the calculator used in the paper and provided many helpful suggestions, for which the author offers thanks. The author also thanks Janet Holtzblatt, Frank Sammartino, and Steven Weinberg for helpful comments and suggestions. Abstract This paper illustrates how the different tax treatments of owner-occupied and rented houses affect the relative costs of owning and renting. In the examples, a representative landlord computes the rental rate (the ratio of the rent to the value of the house) required to break even on an investment in a house. Potential homeowners compare that market rental rate as a tenant with an implicit rental rate that reflects the cost of owning a home. The tax advantages tend to make owning more advantageous than renting for higher-income households, but lower-income households can find renting cheaper than owning.
    [Show full text]
  • Property and Conveyancing William Schwartz
    Annual Survey of Massachusetts Law Volume 1964 Article 6 1-1-1964 Chapter 3: Property and Conveyancing William Schwartz Follow this and additional works at: http://lawdigitalcommons.bc.edu/asml Part of the Property Law and Real Estate Commons Recommended Citation Schwartz, William (1964) "Chapter 3: Property and Conveyancing," Annual Survey of Massachusetts aL w: Vol. 1964, Article 6. Schwartz: Chapter 3: Property and Conveyancing CHAPTER 3 Property and Conveyancing WILLIAM SCHWARTZ §3.1. Federal taxation of real estate: The Revenue Act of 1964. Real estate plays a key role in our national economy because more than 60 percent of the total national wealth is represented by land resources and improvements.1 As a result, real estate has become an attractive and durable investment vehicle. To a considerable extent, the Federal Government, through its tax policies, has increased the financial opportunities afforded by real estate.2 In the 1964 SURVEY year there were a number of interesting developments pertaining to real estate taxation. The Internal Revenue Code grants the owner of real property used in a trade or business or held for the production of income an annual allowance for depreciation.s The availability of this deduc­ tion enables the real estate owner to amortize his mortgage indebted­ ness at the expense of the Federal Government. In addition, the realty owner can convert ordinary income into capital gain by utiliz­ ing a method of accelerated depreciation.' By deducting greater amounts annually (through accelerated depreciation), the realty owner reduces the amount of his ordinary income. Although the depreciation deduction reduces his basis and results in a greater capital gain upon a subsequent sale, this would appear to be.
    [Show full text]
  • Assessing the Theory and Practice of Land Value Taxation
    Policy Focus Report • Lincoln Institute of Land Policy Assessing the Theory and Practice of Land Value Taxation richard F. d y e a n d r i c h a r d W. e n g l a n d Assessing the Theory and Practice of Land Value Taxation Richard F. Dye and Richard W. England Policy Focus Report Series The policy focus report series is published by the Lincoln Institute of Land Policy to address timely public policy issues relating to land use, land markets, and property taxation. Each report is designed to bridge the gap between theory and practice by combining research findings, case studies, and contributions from scholars in a variety of academic disciplines, and from profes- sional practitioners, local officials, and citizens in diverse communities. About this Report The Lincoln Institute has long been interested in the writings of Henry George, who advocated land value taxation in his book, Progress and Poverty (1879). The Institute has sponsored numer- ous studies of land value taxation and related topics, and in 2009 published the book-length analysis, Land Value Taxation: Theory, Evidence, and Practice. Richard F. Dye and Richard W. England, the editors of that volume, summarize its research findings in this report and present recommendations for local policy makers considering alternative property tax measures. Dedication This analysis of land value taxation is dedicated to the memory of C. Lowell Harriss (1912– 2009), professor of economics emeritus at Columbia University, and a long-time proponent of policies that would support land taxation approaches. He was an associate of the Lincoln Institute of Land Policy from its earliest days as an educational institution, and he served on its board of directors for many years.
    [Show full text]