Modeling tax reassessment in development models without a circ ref?
Hey guys in reassessment states (Florida, Georgia, California kind of). How do you guys model taxes without a circ ref?
[{"id": "epo1eyv", "text": "It\u2019s really difficult to do any model without circular refs imo. I allow iterative calcs in my spreadsheets", "replies": [{"id": "epo27ax", "text": "Yeah I agree with the iterative calc. It\u2019s what I did at my previous job. My boss is telling me to find a different way using a macro or VBA instead, and I\u2019m lost haha   If I do figure this out, it would present a hell of a lot more cleanly", "replies": [{"id": "epo49pc", "text": "Maybe ask the excel subreddit. Those people are way beyond my simple valuation skills", "replies": [], "depth": 3}], "depth": 2}, {"id": "epo2m87", "text": "This is how we do it. Sometimes the models simply become unstable. Excel...", "replies": [], "depth": 2}], "depth": 1}, {"id": "epo3zbb", "text": "Options &gt; allow circular reference\n\nCreate an in sheet option to shut it off", "replies": [], "depth": 1}, {"id": "epospc5", "text": "I hired a gentleman to do something similar.  Actually a good experience (I was surprised).  He used a \"button\" / macro on the worksheet.  I asked about it and apparently it was using \"goal seek\".  My knowledge does not go above \"google\" though.  I am sure smarter people than me can be of more assistance.  Good luck!", "replies": [], "depth": 1}, {"id": "epp7b6i", "text": "Can\u2019t you just use trailing NOI? Or just use a fixed growth factor?", "replies": [], "depth": 1}, {"id": "eppwr9v", "text": "What is your current approach? \n\nCommenting on my phone and not sure I completely understand the problem, but you could set up a separate model that estimates the assessment by loading the cap rate. Just take your current proforma, remove the current tax expense and then capitalize the now higher NOI (which does not include a tax expense) with Cap Rate + Tax rate. That'll give you an idea of what the upper end of your assessment should be and you can calculate a tax burden from that value determined by your loaded cap rate", "replies": [{"id": "erbvxkj", "text": "&gt; capitalize the now higher NOI (which does not include a tax expense) with Cap Rate + Tax rate\n\nCap rate with tax rate equals OAR, overall rate.", "replies": [{"id": "erbwuac", "text": "What's your point", "replies": [{"id": "erbzcjp", "text": "&gt;Cap Rate + Tax rate\n\nThat there is a name for this number and it is used in the income approach to value.", "replies": [{"id": "erc1fy0", "text": "Oar and cap rate are the same but and overall rate is not the same thing as a loaded cap rate, which is what cap rate plus tax rate is\n\nhttp://www.commercialcomplete.com/loadfactor.htm", "replies": [{"id": "erc1zbo", "text": "Maybe an east coast west coast thing but I've never heard the term loaded cap rate used.  Cap rate is cap rate derived from a closed sale where the taxes are an operating expense.   OAR refers to the rate used to value NOI.  It is cap rate plus tax rate.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "eprtwa7", "text": "Loading the capitalization rate with the effective tax rate is the method approved by courts for tax appeal. Dm me if you need more info.", "replies": [], "depth": 1}]