Isn’t the gist of the tax fraud case that he claims the value of property high for loan purposes and low for tax purposes? Am I to understand, in his case, that the assessment of the value of his property was left to him? He’s been deciding for years how much he wants to pay in taxes? I owned a house once, albeit not in his jurisdiction, and I was told what it was worth, and arguing it was laborious.
You can’t have it both ways. Requests for mortgages and tax assessments are legal documents. Lying on one or the other constitutes fraud. Lying to a bank to get a bigger loan than you are entitled to, or lying to the municipality to get out of paying taxes. The other question is - how significant are the differences and therefore the fraud; a few thousand could market variances, hundreds of thousands - not likely.
The key here is proving Donald himself was involved in those assessments. However, a number of previous statements by others have said this is so. It’s only a matter whether these statements can be verified under oath.
As I understand, for larger complex estates, they can challenge the municipality’s assessment with legal challenges, including documents submitted to the court? (As you could, if you think the city is seriously overestimating your house value.) In his case, the savings was probably worth the legal fees to challenge. Plus letting them know they’d spend a fortune in lawyers fighting him if they didn’t give in, his typical tactic.
Not to mention those mysterious rent checks to some PO Box on Long Island.
I don’t know a lot about GAAP but I do know you can have a lower tax value for a property through depreciation and other means than its assessed value.
Also, I’m not sure what it means to have a low value value for tax purposes. No one is taxed by the IRS on their assets and any property tax would be based on its value set by the assessor.
As I said, you can fight an assessment (by the local municipality or county that collects property taxes) in court. That would require submitting your own assessments to the court - which would be legal documents. You can depreciate a building, but AFAIK not the land. But when you declare the value for property taxes, or for a mortgage, that needs to be a realistic market value.
For example - There was also an episode with a Trump property upriver from NYC where he donated some of the land as a forest preserve of some sort. (After failing in multiple redevelopment schemes, when neighbours objected) He had to assert the value of the estate and the portion donated to get a break on income tax, IIRC. Obviously, such valuations can be somewhat subjective, but they still have to have some relation to reality, and if they are in contradiction of other documents for bank loans, or misrepresent the status of the estate (was it a commercial venture or a private residence?) then that too has a bearing on the legality of the assertions.
(I think he tried to turn it into a country club, then a subdivision of large lots with very expensive houses. Both were shot down by locals who didn’t want the extra traffic on a very narrow winding road. But IIRC he used the valuation of the multiple lots for large houses - a large value - even though his plan had been denied, to base the value of the donated woodlands - not the lower property tax value. Too many alternative facts.)
I’m not an expert either, but perhaps mark-to-market accounting is an option for commercial real estate?
One instance where market valuation of an asset is certainly relevant for tax purposes is when taking a tax write-off for a donation. Trump apparently massively inflated the value of this donated land:
I asked this same question a couple weeks ago in a different forum. This is the link to that question, and posts 3 and 5 give a good description and a link to an article on the topic. It’s not a long thread and worth reading (only 5 posts).
The TLDR version is that the value of big golf courses, partial developments, and sky scrapers are more complicated than your typical single family residential bungalow. There are actual appraisers involved but they can be influenced and pressured to change their evaluations by arguing about various real influences on properties values.
It’s apparently common to argue to the property tax assessor that a piece of undeveloped swampland in the floodplain with no current development permits is worth very little, while arguing to the bank that this same pristine beach-front property is worth millions as soon as approval to build luxury 200 homes comes through in a week.
The question is did Trump take this tactic far enough often enough to be considered criminal?
This is the key point. Assessments basically pull numbers out of mid-air (or darker places) and can vary. Perhaps, let’s say, a 20% difference can be attributed to different assessors giving different weight to different factors. But… at a certain point, if the difference is too great, the different valuations are likely driven by the demands of the client rather than reality. If so, the motivation may indicate fraud.
After all, ultimately the question is - “what would this property sell for in an open market?”
What tax case? I haven’t seen that any case has reached the stage where particular allegations have been made public by investigators. Are you talking about a particular case or are you talking about hypothetical cases that could be brought?
Not exactly. The municipality will determine the assessed value for tax purposes. The bank will determine the value for its own purposes (i.e., whether the value of the property is high enough to support the secured loan).
Trump may have contested his property tax valuation to get a lower valuation. As part of that, he would have to provide evidence that the property isn’t worth as much as the municipality claimed. For example, he may have submitted a rent roll that shows that rents on the property were much lower than reality or that vacancies were higher, or that it had deferred maintenance and latent defects that would be costly to address, or that, unlike similar properties, it was subject to restrictions on development that reduced its value relative to otherwise similar properties.
On the other hand, when trying to get a big loan on the property, he might have submitted rent rolls that show very high rent, low vacancies, an engineer’s assessment that showed that the property is in exceedingly good condition, and approvals to allow extensive redevelopment of the property that greatly increase its value.
The fraud is probably not Trump’s statement of the value itself. That is, frankly, just his opinion. The fraud (tax or bank) would be in submitting falsified or incomplete evidence of the value. Maybe he was showing one set of documents to the bank to inflate the property’s value and another set of documents to the municipality to deflate its value at roughly the same time. Maybe the bank asked him for all the engineering reports on the building’s condition and he provided the nice one without providing the ugly one that he gave to the municipality.
Yes, but in your case, successfully contesting the valuation might have saved let’s say a few hundred bucks. Having his minions expend a little bit more effort on his properties could potentially save him millions.
Just going to say that my Wife is an appraiser for the GOV. She sees both sides of it. Some (most) want their appraisal lower, some want it higher. It’s nuts.
I don’t know how she does that job.
Right, there is nothing illegal about that anymore than if I am selling a piece of property it is a “invaluable piece of history with a beautiful patina” while if I am buying it, it is “an old rusty piece of junk.”
AFAIK, it’s fine to do that, but you do open yourself up to an argument (by either side) that your word cannot be trusted because you are not internally consistent.
We had the same thing in Colorado with people claiming their undeveloped land was agricultural. The Legislature eventually had to specifically define ag land.
Yeah, we had 40 unimproved acres in Colorado that was zoned agricultural. We did have a grazing lease for it. I think we where paid 10 dollars a year. Never did see a cow on it, but they where around.
We ended up selling it. These rules about what is and isn’t Ag are going to get tighter. And taxes on undeveloped residential land are real high.
We also own two adjacent acres. One has our house on it. The assessor lets you do what is called an in house combine on the two lots to save taxes on the unimproved lot. Well, that’s going away, we are going to vacate the property line between and re-plat it also to save taxes.