Opinion ID: 2622017
Heading Depth: 1
Heading Rank: 6

Heading: The properties' full cash value was properly determined under an income capitalization approach

Text: Having recognized that the Assessor utilized an appropriate method under Nevada's tax assessment scheme for assessing the taxable value of income-producing property with constructional defectsthe income capitalization methodwe turn to the narrower issue of whether that method was properly applied in this case. As discussed, the Assessor determined the taxable value of Olen Residential's properties under NRS 361.227(1) and attempted to ensure that the properties' taxable value did not exceed their full cash value by utilizing one of the methods set forth in NRS 361.227(5). The type of real property at issue and the market data generally available will determine whether the Assessor's appraised taxable value exceeds the real property's full cash value. Olen Residential, as indicated, contends that none of the three methods enumerated in NRS 361.227(5) are appropriate for determining whether the Assessor's appraised taxable value exceeds the real property's full cash value because they do not adequately account for the properties' constructional defects. Respondents assert that since Olen Residential's properties generate income, the income capitalization approach most accurately determines their full cash value, including consideration of the constructional defects. When, as in this case, the property produces an income, the income capitalization approach is usually the best method. Indeed, several jurisdictions have recognized that capitalizing income produced by real property most accurately determines the property's full cash values, [18] and although this court has not unequivocally stated that income capitalization is the best approach to assessing income-producing property, this court has consistently discussed the income capitalization approach with respect to valuing such property. [19]