If the market value of the replacement is within 120 percent of the market value of the property substantially damaged or destroyed, the factored base year value of the damaged or destroyed property will be transferred to the replacement. (R&T 69(b)(1))
If the market value of the replacement is more than 120 percent of the market value of the property substantially damaged or destroyed, the base year value of the replacement will be the factored base year value of the damaged or destroyed property plus the amount by which the value of the replacement exceeds 120 percent of the value of the property that was damaged or destroyed. (R&T 69(b)(2))
| Example: |
Factored Base Year Value (FBYV) of damaged or destroyed property = |
$150,000 |
| Market value of damaged or destroyed property = |
$220,000 |
| Replacement property value allowed for transfer of FBYV (120% * $220,000) = |
$264,000 |
| Scenario 1: |
Market value of replacement property = |
$253,000 |
| |
$253,000 is less than $264,000 |
|
| |
New assessed value of replacement property = |
$150,000 |
| Scenario 2: |
Market value of replacement property = |
$275,000 |
| |
Excess market value ($275,000 - $264,000 = $11,000) |
|
| |
New assessed value of replacement property ($150,000+$11,000) = |
$161,000 |
| Scenario 3: |
Market value of replacement property = |
$125,000 |
| |
$125,000 is less than the $150,000 FBYV of the original property |
|
| |
New assessed value of replacement property = |
$125,000 |
