cell tower w/ lump sum payment

[hastalavista]

Is there some confusion with profits earned vs. value?

If the lease has been paid lump-sum, that is probably a taxable event that is evidenced in some entity's income.
If the lease has been paid-off, then there is no remaining value to any lease.


Did I miss something?

 

[PropertyEconomics]

Is there some confusion with profits earned vs. value?

If the lease has been paid lump-sum, that is probably a taxable event that is evidenced in some entity's income.
If the lease has been paid-off, then there is no remaining value to any lease.


Did I miss something?

Denis .. I thought the same thing .. but you know its an interesting question if you look at it from a slightly differen perspective. What about the real estate taxes? Is the property under a tower lease typically assessed to the Lessee or the Lessor? If its the lessor, the new owner would be responsible for taxes on improvements they never received any benefits from. I would guess, had it been thought of, it would have been reflected in the price paid, but it is really and interesting question.

 

[hastalavista]

Denis .. I thought the same thing .. but you know its an interesting question if you look at it from a slightly differen perspective. What about the real estate taxes? Is the property under a tower lease typically assessed to the Lessee or the Lessor? If its the lessor, the new owner would be responsible for taxes on improvements they never received any benefits from. I would guess, had it been thought of, it would have been reflected in the price paid, but it is really and interesting question.

Agreed!

And one that could be answered in the IRS hearing with an appraisal demonstrating that if the lease was pre-paid, the value to the.... (should I say the remainder?) has been impacted!

 

[PropertyEconomics]

Agreed!

And one that could be answered in the IRS hearing with an appraisal demonstrating that if the lease was pre-paid, the value to the.... (should I say the remainder?) has been impacted!

Im not sure why there would be an IRS hearing. None the less .. if the lease were prepaid .. which is was .. and the property sells .. is there a deteriment to the new owner for expenses which they have never received income to offset?

 

[hastalavista]

Im not sure why there would be an IRS hearing. None the less .. if the lease were prepaid .. which is was .. and the property sells .. is there a deteriment to the new owner for expenses which they have never received income to offset?

Agreed.

And one would assume that would be reflected in the sales price.
Nonetheless, it would have to be considered in the appraisal. :new_smile-l:

 

[aussie ken]

Is that all perfectly clear now Ryan?

 

[Michigan CG]

What are the tax consequences to the new owner of the former owner pocketing $150,000??? Im sorry but I dont follow your logic here. The property is held by the Tower Company via lease ... I would think they would be taxed on the underlying and and their improvements.

Obsolescence, if any, would depend on what comparables you used to value the subject .. wouldnt it???

If the lease is a gross lease with the property owner paying property taxes it would be detrimental to the new owner depending on how the assessor values the tower.

 

[Mark K]

The cell tower leases I've reviewed all state that the lessee, the cell tower owner, is responsible for his portion of the real estate taxes on the cell parcel and for the taxes on the improvements on the same. No expense to the property owner.

In this area, the assessor values the real estate at different rates. Say 40 acre ag field at $1,000/acre and .25 acre cell site at $150K/acre commercial rate.

 

[Terrel L. Shields]

How does the assessor value this "improvement"?

In most of the area I am in, the assessor does not value the tower. It is considered a "utility" and is appraised at the state level. The tower therefore, is not assessed. The land beneath is included usually at the local commercial land rate. On such a small tract, that would be inconsequental unless it is awfully expensive land...which suggests the whole property is commercial.

The rights appraised however, are the fee simple and the rights in the land beneath the tower are now a leased fee estate...and virtually no value could be given it in consideration that it won't be available for 99 years and has no income coming in.

Therefore, to me, the question would be is the tower so intrusive as to pose a negative influence on the property. I certainly would not be pleased to have a tower stuck in my backyard, but each situation is different and I don't pretend to know the answer to that question.

BTW, if I was the buyer and all the benefit of the tower for the next 99 years was is a headache, I'd deed that .006 acres over to the tower owner rather than take possession. Deed it to the city. anything. The 99 yr lease is their way of escaping property taxes and liablity on the land. Who gets sued if a kid climbs and falls off the thing?

 

[Michigan CG]

Denis .. I thought the same thing .. but you know its an interesting question if you look at it from a slightly differen perspective. What about the real estate taxes? Is the property under a tower lease typically assessed to the Lessee or the Lessor? If its the lessor, the new owner would be responsible for taxes on improvements they never received any benefits from. I would guess, had it been thought of, it would have been reflected in the price paid, but it is really and interesting question.

That was my point.....when I was thinking out loud.