Opinion ID: 2622017
Heading Depth: 1
Heading Rank: 4

Heading: Nevada's property tax assessment scheme

Text: In arguing that its properties' constructional defects were not properly accounted for when the taxable values were assessed, Olen Residential argues that neither the enumerated valuation methods within Nevada's statutory tax assessment scheme, nor the regulations promulgated thereto, provide a method sufficient to assess their properties' values. To determine whether Nevada law currently provides an appropriate method for valuing properties affected by constructional defects, we consider Nevada's current tax assessment scheme. Article 10, Section 1 of the Nevada Constitution generally directs the Legislature to provide laws for the assessment and taxation of real property. The Legislature accordingly enacted NRS 361.227 for assessing real property's taxable value and assigned county assessors the task of determining the taxable value for property located within their designated counties. [6] NRS 361.227(1)(a) essentially directs the county assessor to appraise two components of property in determining its taxable value: the land and any improvements on the land. The land is assessed in light of its uses, given any improvements on it. [7] With respect to appraising improvements on the land, NRS 361.227(1)(b) directs the assessor to use the cost approach, providing that the value of any improvements must be appraised by subtracting any applicable obsolescence, or impairment to property, [8] and other depreciation from the cost of replacing the improvements. After the assessor determines the taxable value of the real property as set forth in NRS 361.227(1)by appraising the land and any improvements on itthe assessor must ensure that the property's taxable value does not exceed its full cash value. [9] To determine whether a property's taxable value, as determined under NRS 361.227(1), exceeds its full cash value, NRS 361.227(5) provides three alternative methods that the assessor may utilize: (1) a comparable sales analysis; (2) a summation of the values of the land and any improvements; and (3) [c]apitalization of the fair economic income expectancy or fair economic rent, or an analysis of the discounted cash flow. If the real property's value, calculated using one of those methods, is less than the real property's taxable value calculated under NRS 361.227(1), the assessor must reduce the property's taxable value accordingly, so that it does not exceed the property's full cash value. [10] In addition to being used to determine full cash value, these methods may also be used to determine whether an improvement's replacement cost is subject to depreciation for obsolescence under NRS 361.227(1). [11]