Apparently New Jersey’s real estate tax assessors fall short of the mark in Tax Court, but Los Angeles’ valuations are right on the money.

Compare and contrast Judge Ruwe laying a blast on the Garden State’s valuers in my blogpost “Quanto? Il Prezzo,” 7/24/12, with STJ Lewis (“That Fine Name”) Carluzzo’s encomium to the Los Angeles County Office of the Assessor in Sharon M. Nielsen and Steve L. Nielsen, 2017 T. C. Sum. Op. 31, filed 5/8/17.

S&S were claiming depreciation on some LA rental properties, and apparently they got some of their depreciation deductions allowed. They started with a rookie error, taking depreciation based upon their basis in both land and building. Land is not depreciable because it does not wear out.

So once S&S concede the rookie error, the question is what portion of the total value of each property is the land (non-depreciable) and the improvements (buildings and fixtures, which are)?

IRS goes with the LA County appraisers, but S&S claim the LA guys go high on land and low on improvements. S&S put in an October 4, 2012 billet doux from the chief deputy assessor to the County exec, talking about upgrades to the assessment system.

STJ Lew: “Petitioners assert, among other things, that the Los Angeles County Office of the Assessor’s data ‘is extraordinarily inaccurate’ and internally inconsistent.

“We have carefully reviewed the record, including the October 4, 2012, letter and a document titled ‘Parcel Detail–Los Angeles County Assessor Portal’ on which petitioners rely, and do not share their concerns with respect to the reliability or unreliability of the Los Angeles County Office of the Assessor’s assessments.

“Nor do we give much weight to the after-the-fact allocations that petitioners advance in this proceeding.  Although we acknowledge that the owner of property is qualified by his ownership alone to testify as to its value, see Dehmer Distributors, Inc., v. Temple, 826 F.2d 1463, 1466 (5th Cir. 1987); United States v. Laughlin, 804 F.2d 1336, 1340 (5th Cir. 1986); Dietz v. Consolidated Oil & Gas, Inc., 643 F.2d 1088, 1094 (5th Cir. 1981); Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 698 (5th Cir. 1975), modified on other grounds en banc, 575 F.2d 564 (5th Cir. 1978), we are aware of no authority that suggests that the qualification extends to an allocation of the value of property between land and improvements.” 2107 T. C. Sum. Op. 31, at p. 8.

Besides, when S&S bought one of the properties, they got a professional appraisal that showed the ratio of land to building not out of line with what the County gang were doing. I will comment that the appraisal was done nine years before the year at issue.

Howbeit, apparently LA does it better than NJ. In Tax Court, anyway.