Compilation of Rules and Regulations of the State of Georgia › Department 560 - RULES OF DEPARTMENT OF REVENUE › Chapter 560-11 - LOCAL GOVERNMENT SERVICES DIVISION › Subject 560-11-10 - APPRAISAL PROCEDURES MANUAL › Rule 560-11-10-.02 - Definitions

Current through Rules and Regulations filed through June 27, 2024
(1) Definitions.
				When used in this Chapter, the definitions found in this Rule shall apply.
(a) Absorption rate. "Absorption rate" means
				the rate at which the real estate market can absorb real property of a given
				type.
(b) Appraiser. "Appraiser"
				means a member of the county appraisal staff, who serves the board of tax
				assessors and whose position was created pursuant to Part 1 of Article 5 of
				Chapter 5 of Title 48 of the Official Code of Georgia Annotated. This term does
				not limit its meaning to a single appraiser and may mean one or more members of
				the county appraisal staff.
(c)
				Basic cost approach. "Basic cost approach" means a cost approach procedure,
				used in the mass appraisal of personal property, which uses standard estimates
				of the most common factors affecting the value of such property. The basic cost
				approach is intended to provide a uniform estimate of personal property
				value.
(d) Depreciation.
				"Depreciation" means the loss of value due to any cause. It is the difference
				between the market value of a structural improvement or piece of equipment and
				its reproduction or replacement cost as of the date of valuation. Depreciation
				is divided into three categories, physical deterioration, functional
				obsolescence, and economic obsolescence. Depreciation may be further
				characterized as curable or incurable depending upon the difficulty or
				practicality of restoring the lost value through repair or
				maintenance.
(e) Economic life.
				"Economic life" means the period during which property may reasonably be
				expected to perform the function for which it was designed or
				intended.
(f) Economic
				obsolescence. "Economic obsolescence" means a form of depreciation that
				measures a loss of value from negative influence external to the real or
				personal property. It results when the desirability or useful life of real or
				personal property is impaired due to forces such as changes in optimum use,
				legislative enactment that restricts or impairs productivity, and changes in
				supply and demand relationships. Economic obsolescence is normally
				incurable.
(g) Effective age.
				"Effective age" means the age of an improvement to property as compared with
				other property performing like functions. It is the actual ageless the age that
				has been taken off by face-lifting, structural reconstruction, removal of
				functional inadequacies, modernization of equipment, and similar repairs and
				overhauls. It is an age that reflects a true remaining life for the property,
				taking into account the typical life expectancy of buildings or equipment of
				its class and usage.
(h) Fair
				market value. "Fair market value" means fair market value as defined in Code
				section
				 48-5-2(3).
(i) Final assessment. "Final assessment"
				means the assessed value of real property as stated on the Annual Notice of
				Assessment as approved by the Board of Assessors. Amendments to "Final
				assessment" for real property are prohibited absent a clerical error or some
				other lawful basis; and in the case of personal property, the appraisal staff
				has completed its audit of the personal property pursuant to Rule
				 560-11-10-.08(4)(d)  within the three year statute of limitations.
(j) Functional obsolescence. "Functional
				obsolescence" means a form of depreciation that measures a loss of value from a
				design deficiency or appearance in the market of a more innovative design. Some
				functional obsolescence may be curable and some functional obsolescence may be
				incurable.
(k) Inventory.
				"Inventory", means goods held for sale or lease or furnished under contracts
				for service; also, supplies, packing materials, spare parts, raw materials,
				work in process or materials used or consumed in a business.
(l) Large acreage tract. "Large acreage
				tract" means a rural land tract that is greater in acreage than the small
				acreage break point.
(m) Mass
				appraisal. "Mass appraisal" means the process of valuing a universe of
				properties as of a given date using standard methodology, employing common data
				and allowing for statistical testing.
(n) Most Recent Arm's Length Sale. As
				referenced in OCGA
				 48-5-2(3), transactions must occur prior to the statutory date of valuation to become
				eligible for the value limitations imposed in 48-5-2(3). Furthermore, where the
				exchange of property is defined as an arm's length transaction, the sum of the
				value of the exchanged real estate property components, land and improvements,
				in the year following the property exchange shall not exceed the transaction's
				sale price adjusted for non-real estate values such as but not limited to,
				timber, personal property, etc. The adjustment to the value of the real estate
				shall remain in effect for at least the digest year following the transaction.
				With respect to changes in the exchanged real estate property components since
				the time of exchange (sale date), the value of new improvements, value of
				additions to existing improvements (footprint of exchanged structure has been
				altered), major remodeling or renovations to existing structures (footprint of
				exchanged structure has not been altered), and adjustments to land due to
				consolidation of tracts, new surveys, zoning changes, land use changes, etc.
				shall be added to the sales price adjusted values. In the event an exchanged
				real estate property structure is renovated or remodeled, the term major shall
				be construed such that both the property owner and BOA would reasonably
				conclude a major renovation/remodeling has occurred. If either party, acting
				reasonably, could debate that the renovation/remodeling effort was not major in
				nature, the renovation/remodeling effort does not qualify and shall not be
				added to the sales price adjusted values. Any modifications made to the
				exchanged real estate property after the sale date that result in a lower value
				of the exchanged property shall be considered in the final valuation of
				property for the digest.
(o)
				Original cost. "Original cost" means, in the case of machinery, equipment,
				furniture, personal fixtures, and trade fixtures in the hands of the final
				user, all the direct costs associated with acquiring, transporting and
				installing such property at the site where it is to be used. This includes the
				cost of the property to the property owner, the cost of transporting the
				property to its present site, the cost of any on-site assembly or customized
				modification of the property, the cost of installing the property, the cost of
				installing personal fixtures and trade fixtures necessary for the proper
				operation of the property, and any sales or use tax paid on the property.
				Original cost is equivalent to original cost new if the property owner was the
				first to put the personal property into service.
(p) Original cost new. "Original cost new"
				means, in the case of machinery, equipment, furniture, personal fixtures, and
				trade fixtures in the hands of the final user, all the direct costs associated
				with acquiring, transporting and installing such property at the site where it
				is to be used. This includes the historical cost of the property at the time it
				was first put into service new, the cost of transporting the property to its
				present site, the cost of any on-site assembly or customized modification of
				the property, the cost of installing the property, the cost of installing
				personal fixtures and trade fixtures necessary for the proper operation of the
				property, and any sales or use tax paid on the property. Original cost new is
				equivalent to original cost if the property owner was the first to put the
				personal property into service.
(q)
				Paired sales analysis. "Paired sales analysis" means the comparing of the sale
				prices of similar properties, some with and some without a particular
				characteristic, in order to determine what portion of the difference in sales
				price might be attributable to such characteristic.
(r) Personal fixtures. "Personal fixtures"
				means personal property that has been set-up or installed on land or in a
				building or in a group of buildings and is not permanently attached to such
				land or buildings. A consideration for whether personal property is a personal
				fixture is whether its removal would cause significant damage to such property
				or to the real property on which it has been set-up or installed. The term
				personal fixtures shall not include trade fixtures. Personal fixtures are
				classified as personal property. Examples of personal fixtures are desks,
				shelving, display cases and gondolas.
(s) Personal property. "Personal property"
				means tangible personal property that may be seen, weighed, measured, felt, or
				touched or which is in any other manner perceptible to the senses. Personal
				property shall include trade fixtures. For the purposes of this Rule, personal
				property shall not include the capital stock of all corporations; money, notes,
				bonds, accounts, or other credits, secured or unsecured; patent rights,
				copyrights, franchises, and any other classes and kinds of property defined by
				law as intangible personal property.
(t) Physical deterioration. "Physical
				deterioration" means a form of depreciation that measures the loss of utility
				of real or personal property over time from wear and tear, age, and exposure to
				the elements. Some physical deterioration may be curable and some physical
				deterioration may be incurable.
(u)
				Ready market. "Ready market" means a market, possibly global, where exchanges
				of machinery, equipment, personal fixtures and trade fixtures occur with such
				regularity and under such conditions as to provide a reliable measure of fair
				market value. Five conditions that may indicate a ready market are: the items
				of personal property being sold within the market are reasonable substitutes
				for each other; there are an adequate number of buyers and sellers of the
				personal property in the market, no one of whom can measurably affect price;
				there is an absence of artificial restraints and unusual incentives in the
				market; the item of personal property is reasonably free to be moved where it
				will receive the greatest return and buyers are reasonably free to buy where
				the price is lowest; and buyers and sellers are knowledgeable and informed
				about market conditions.
(v) Real
				estate. "Real estate" means the physical parcel of land, improvements to the
				land, improvements attached to the land, real fixtures and appurtenances such
				as easements.
(w) Real fixtures.
				"Real fixtures" means personal property that has been installed or attached to
				land or a building or group of buildings and is intended to remain permanently
				in its place. A consideration for whether personal property is a real fixture
				is whether its removal would cause significant damage to such property or to
				the real property to which it is attached. The term real fixtures shall not
				include trade fixtures. Real fixtures are classified as real property. Examples
				of real fixtures are plumbing, heating and cooling, and lighting
				fixtures.
(x) Real property. "Real
				property" means the bundle of rights, interests, and benefits connected with
				the ownership of real estate. Real property does not include the intangible
				benefits associated with the ownership of real estate, such as the goodwill of
				a going business concern.
(y)
				Replacement cost. "Replacement cost" for real property means the cost required
				to construct a similar structure with like utility as the subject property
				using modern design, materials, and workmanship. Replacement cost for personal
				property means the current cost of a similar new item having the nearest
				equivalent utility as the subject property.
(z) Reproduction cost. "Reproduction cost"
				for real property means the cost required to construct an identical or exact
				replica structure of the subject property. Reproduction cost for personal
				property means the current cost of duplicating an identical new item.
(aa) Residual value. "Residual value" means
				the value of personal property that is at the end of its normally expected
				economic life but still in use.
(bb) Rural land. "Rural land" means any land
				that normally lies outside corporate limits, planned subdivisions, commercial
				sites, and industrial sites.
(cc)
				Salvage value. "Salvage value" means the value of personal property that is at
				the end of its normally expected economic life and has been taken out of
				use.
(dd) Small acreage break
				point. "Small acreage break point" means the point, expressed as a number of
				acres, at which the slope of a trend line, drawn through the plotted qualified
				sales of rural land on a graph, reflects a distinct and pronounced change. Such
				graph uses the dollars per acre on the vertical axis and numbers of acres on
				the horizontal axis. The small acreage break point should show the point below
				which the market factors of accessibility and desirability of the land
				primarily influence value, and above which the productivity of the soil and
				suitability for timber growth primarily influence value.
(ee) Small acreage tract. "Small acreage
				tract" means a rural land tract that is equal to or smaller in acres than the
				small acreage break point.
(ff) Tax
				situs. "Tax situs" means the location of personal property for ad valorem tax
				purposes.
(gg) Trade fixtures.
				"Trade fixtures" means fixtures that are owned and temporarily installed or
				attached to a rented space or building by a tenant and used in conducting a
				business. For personal property to be classified as trade fixtures the lease or
				rental agreement has to show intent for the fixtures to be removed by the owner
				at the termination of the lease. Fixtures that revert to the landlord when the
				lease is terminated are not trade fixtures. Property shall not be classified as
				a trade fixture when the cost of removal, or damage that removal would cause to
				the realty, or to the fixture itself, clearly indicates that a tenant is
				unlikely to remove such fixture at the termination of the lease. Trade fixtures
				shall be classified as personal property.
(hh) Transitional real property.
				"Transitional real property" means any real property that is undergoing a
				change in use, such as residential, agricultural, commercial, or industrial,
				and has not been firmly established in its new use. Change in use may be
				evidenced by recent zoning changes, purchase by a known developer, affidavits
				of intent, or close proximity to property exposed to these market
				factors.
(ii) Trend. "Trend" means
				an observable tendency of behavior such as stable economic direction over
				extended periods despite temporary fluctuations.