The Second Department, reversing (modifying) Supreme Court, determined the recent sales price of a golf course was not the proper benchmark for valuing the property for tax purposes. The $12,000,000 purchase price reflected the potential value of the land as developed:
“[T]he purchase price set in the course of an arm's length transaction of recent vintage, if not explained away as abnormal in any fashion, is evidence of the highest rank' to determine the true value of the property at that time” … . However, improved property must be assessed based on its current condition and use (see RPTL 302…). “Property is assessed for tax purposes according to its condition on the taxable status date, without regard to future potentialities or possibilities and may not be assessed on the basis of some use contemplated in the future”… . Accordingly, in the context of a tax certiorari proceeding involving improved land, a recent sales price that was based upon speculation for future development, rather than continuation of the property's current use, is not a proper indicator of value (see RPTL 302…).
Here, the evidence at trial established that the subject property was purchased for future residential development that had not yet occurred, and the sales price was based upon this residential development potential. Accordingly, the Supreme Court's adoption of the recent sales price as the valuation of the property for assessment purposes was in error … . Matter of Hampshire Recreation, LLC v Board of Assessors, 2016 NY Slip Op 01847, 2nd Dept 3-16-16
REAL PROPERTY TAX LAW (PURCHASE PRICE OF GOLF COURSE NOT PROPER VALUATION FOR TAX PURPOSES, PRICE REFLECTED POTENTIAL VALUE OF LAND AS DEVELOPED)/PROPERTY TAX ASSESSEMENT (PURCHASE PRICE OF GOLF COURSE NOT PROPER VALUATION FOR TAX PURPOSES, PRICE REFLECTED POTENTIAL VALUE OF LAND AS DEVELOPED)