I'll stick by my statements. I don't think there is enough
data to provide a reliable indication. I can logically
think the problem through, and its probably close to
50% of the other market value. But the tenor of the
problem is that its something other than 50%.
It reminds me of the problem of the people who call me
and ask for a market value of their house, cause they're
going to have it burned down by the fire department and
their accountant said they could deduct its market value.
I turn down those assignments too. But I know someone
out there does them. Just seems misleading to me.
You have cut right to the core of the issue. The essence of theory. Yes you are valuing a bundle of ownership rights. Those ownership rights can take many forms and have many different values. Elliott, I am curious as to why you believe it misleading?
Why would a house that can just as well be bulldosed
be entitled to a "tax deduction" because its being used
as a practice burn for a fire department? A market
value appraisal on the building's value would just
be misleading. Sometimes decent oceanfront houses
are torn down or practice burned to make way for
the new trophy house.
I always tell the owner to have their accountant
or tax adviser call me and cite the IRS rules. No
one has ever called back. What's scary is I get
a least one call a year on these practice burns.
I gotta disagree with your outlook .. something of value was removed to make a vacant lot (subject to re-development.) It can, and should be valued .. and I doubt IRS is gonna pick apart your opinion (an opinion that should be well-founded, btw.)
Yep. The home owners think (along with the
help of the local fire department) that they
can deduct the value of the structure....and
standing there its probably worth $20,000
to $100,000. I had one realtor-owner who
had a perfectly fine house, but a unappropriate,
crappy quality, tudor style that didn't look right
for an oceanview lot with water frontage. So
they torched it (I jokingly suggested they could
get its full value if "they" set the match and then
called the fire department.)
My point for brining up the 'burn' appraisals, is
that it strikes me as someone wanting something
for nothing, like the "what is a 50% interest
Personally, that is the type assignment I love. I charge by the hour. It is not the money but the challenge that I love most. I get bored with run of the mill assignments. In fact new problems and valuation issues are one of the reasons I like this job and have stayed in the business so long. But I can understand why some people would be hesitate to take on this type of assignment. Very interesting, very interesting indeed.