06-10-1985 Council Packet - Laserfiche WebLink

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Mayor Mary C. Butler and et. al. June 5, 1985 Page Three Another important part of the Tax Court's language is that the sale is a "cash" sale. This criteria is meant to take into account the effect that the type of financing used has on the sales price. We are all aware of the effect that high interest rates have had on the housing market in recent years. If you were able to buy two identical items, one for $130,000.00 and had to pay 14% interest on that purchase for 20 years, and the other for $160,000.00 but only had to pay 8% interest for the 20 year tern, the $130,000.00 purchase would end up costing you a total of $312,000.00 while the $160,000.00 purchase would cost a total of $288,000.00. Therefore, the total cost of the $160,000.00 purchase would be $24,000.00 less than the total cost of the $130,000.00 purchase even though the original stated purchase price was $30,000.00 greater. Both the Court in its decisions on market value of properties and the Minnesota Legislature in its statutes on sales ratio studies compel the consideration of the factor of financing in arriving at values. The "estimated market value" of our property that we are requesting you to consider is applicable only to real estate, it does not apply to personal property that is contained in or on the property. The legal definition of personal property encompasses many items which are usually included in the sale of a home, even a number of items which are attached to the structure but which can be removed without damaging the structure. The reason that the standard purchase agreement contains a printed listing of such items as awnings, shades, drapery rods, lighting fixtures, water soft- eners, hot water tanks, television antenna, etc. are that these items are personal property and unless they are specified in that contract the seller is free to remove them as he has not sold them. The fact that they are usually included in the sale of the home does not change their status as personal property. Nor does the fact that they are usually included in the sale of a home mean that they are to be included in "estimated marker value" and thereby make them subject to ad valorem real estate taxes. The State of Minnesota repealed its' tax on personal property many years ago. It is our opinion that the "fair market value" of our home is approximately $128,000.00 of which $35,000.00 should be attributed to the land and $93,000.00 to the structure. The Lasis for our opinion i- as follows: a.) The property we purchased had been on the market for approximately 14 months prior to the time we signed a purchase agree- ment to buy it. This period of time was certainly sufficient to adequately test the market for it.