Mississippi Property Tax Assessment

§ 27-35-49. Assessment of lands; appraisal according to true value.

It shall be the duty of the tax assessor to assess all the lands in his county and he shall require the owner, agent, or person having possession, or charge, of any lands, to render a list of all lands owned, or in charge, or in possession, of such owner, agent or person, and land shall be appraised according to its true value and assessed in proportion thereto, taking into consideration the improvements thereon.

Every person owning or being in possession, or in charge, of any land shall deliver to the tax assessor on demand, and in any event, not later than April first in each year, a list of all lands owned by, or in possession, or in charge, made out on the tax lists prescribed; and showing the total number of acres (except the land be platted by blocks and lots), the total number of acres of cultivatable lands and the value thereof, and the number of acres of uncultivatable land and the value thereof and the number of acres devoted to agricultural purposes as of January 1 of each year; and buildings or improvements subject to taxation on any lands returned for assessment. If the lands be surveyed and platted, it shall be returned so as to clearly identify it by the recorded plat thereof, and the list rendered shall disclose the value of each lot and the value of any buildings, structures, or improvements thereon. Any person required by this section to render a list of any lands shall show in what road district, school district, levee district, municipality, or other taxing district, the same is located. If any person shall deliver or disclose to an assessor, or deputy assessor, a list, statement or return in regard to his land which, in the opinion of the assessor, or deputy assessor, is false or fraudulent, or contains any understatement or undervaluation, or fails to show the proper classification of lands, or fails to show buildings and improvements, or other elements of value, the assessor shall make an assessment of the land with the proper classification thereof including the omitted things, at a valuation equal to the value at which like lands similarly situated are assessed. Lands not given in by any person shall be assessed in the same manner by the assessor at a valuation equal to the assessment of other like lands similarly situated and all buildings and improvements, or other elements of value shall in all cases be separately valued and assessed.

§ 27-35-50. Determination of true value for purposes of assessment.

(1) True value shall mean and include, but shall not be limited to, market value, cash value, actual cash value, proper value and value for the purposes of appraisal for ad valorem taxation.

(2) With respect to each and every parcel of property subject to assessment, the tax assessor shall, in ascertaining true value, consider whenever possible the income capitalization approach to value, the cost approach to value and the market data approach to value, as such approaches are determined by the State Tax Commission. For differing types of categories of property, differing approaches may be appropriate. The choice of the particular valuation approach or approaches to be used should be made by the assessor upon a consideration of the category or nature of the property, the approaches to value for which the highest quality data is available, and the current use of the property.

(3) Except as otherwise provided in subsection (4) of this section, in determining the true value of land and improvements thereon, factors to be taken into consideration are the proximity to navigation; to a highway; to a railroad; to a city, town, village or road; and any other circumstances that tend to affect its value, and not what it might bring at a forced sale but what the owner would be willing to accept and would expect to receive for it if he were disposed to sell it to another able and willing to buy.

(4) (a) In arriving at the true value of all Class I and Class II property and improvements, the appraisal shall be made according to current use, regardless of location.

(b) In arriving at the true value of any land used for agricultural purposes, the appraisal shall be made according to its use on January 1 of each year, regardless of its location; in making the appraisal, the assessor shall use soil types, productivity and other criteria set forth in the land appraisal manuals of the State Tax Commission, which criteria shall include, but not be limited to, an income capitalization approach with a capitalization rate of not less than ten percent (10%) and a moving average of not more than ten (10) years. However, for the year 1990, the moving average shall not be more than five (5) years; for the year 1991, not more than six (6) years; for the year 1992, not more than seven (7) years; for the year 1993, not more than eight (8) years; and for the year 1994, not more than nine (9) years; and for the year 1990, the variation up or down from the previous year shall not exceed twenty percent (20%) and thereafter, the variation, up or down, from a previous year shall not exceed ten percent (10%). The land shall be deemed to be used for agricultural purposes when it is devoted to the commercial production of crops and other commercial products of the soil, including, but not limited to, the production of fruits and timber or the raising of livestock and poultry; however, enrollment in the federal Conservation Reserve Program or in any other United States Department of Agriculture conservation program shall not preclude land being deemed to be used for agricultural purposes solely on the ground that the land is not being devoted to the production of commercial products of the soil, and income derived from participation in the federal program may be used in combination with other relevant criteria to determine the true value of such land. The true value of aquaculture shall be determined in the same manner as that used to determine the true value of row crops.

(c) In determining the true value based upon current use, no consideration shall be taken of the prospective value such property might have if it were put to some other possible use.

(d) In arriving at the true value of affordable rental housing, the assessor shall use the appraisal procedure set forth in land appraisal manuals of the State Tax Commission. Such procedure shall prescribe that the appraisal shall be made according to actual net operating income attributable to the property, capitalized at a market value capitalization rate prescribed by the State Tax Commission that reflects the prevailing cost of capital for commercial real estate in the geographical market in which the affordable rental housing is located adjusted for the enhanced risk that any recorded land use regulation places on the net operating income from the property. The owner of affordable rental housing shall provide to the county tax assessor on or before April 1 of each year, an accurate statement of the actual net operating income attributable to the property for the immediately preceding year prepared in accordance with generally acceptable accounting principles. As used in this paragraph:

(i) "Affordable rental housing" means residential housing consisting of one or more rental units, the construction and/or rental of which is subject to Section 42 of the Internal Revenue Code ( 26 USC 42 ), the Home Investment Partnership Program under the Cranston-Gonzalez National Affordable Housing Act ( 42 USC 12741 et seq.), the Federal Home Loan Banks Affordable Housing Program established pursuant to the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 (Public Law 101-73), or any other federal, state or similar program intended to provide affordable housing to persons of low or moderate income and the occupancy and maximum rental rates of such housing are restricted based on the income of the persons occupying such housing.

(ii) "Land use regulation" means a restriction imposed by an extended low-income housing agreement or other covenant recorded in the applicable land records or by applicable law or regulation restricting the maximum income or residents and/or the maximum rental rate in the affordable rental housing.

(5) The true value of each class of property shall be determined annually.

(6) The State Tax Commission shall have the power to adopt, amend or repeal such rules or regulations in a manner consistent with the Constitution of the State of Mississippi to implement the duties assigned to the commission in this section.

§ 27-35-81. [Effective 7/1/2010]When assessment rolls filed; board may extend time.

(1) If the assessment is conducted by or under the direction of the assessor, the assessor shall complete the assessment of both real and personal property and file the roll or rolls with the clerk of the board of supervisors on or before the first Monday in July of each year. He shall make an affidavit and append it to each roll, showing that he has faithfully endeavored to ascertain and assess all the persons and property in his county, that he has not omitted any person or thing, or placed upon, or accepted an under valuation of any property, through fear, favor or partiality, and that he has required every taxpayer to make the oath required to be taken by the person rendering a list of his taxable property wherever possible. The assessor shall file with the roll or rolls, under oath, a list showing the name of every taxpayer who has failed or refused to make oath to his tax lists.

(2) If the roll or rolls are not filed as required by this section on or before the first Monday in July of each year, the board of supervisors at its July meeting shall adopt an order showing the failure of the roll or rolls to be filed and shall certify to the Department of Revenue a statement showing such failure and the time necessary to complete the roll or rolls.

(3) Upon receipt of such certificate from the board of supervisors of any county, the Department of Revenue shall provide when such roll shall be completed and filed, and the date when the board of supervisors shall meet to equalize the roll or rolls, and the time when objections to the assessments contained in such roll or rolls, shall be heard by the board of supervisors, provided that not less than ten (10) days' notice shall be given prior to the hearing of such objections. When such roll or rolls shall be filed, they shall be dealt with in all respects as now provided by law except as to the time.


§ 27-35-89. Objections to assessments generally.

(1) The board of supervisors of each county shall hold a meeting at the courthouse, or at the chancery clerk's office in counties where the chancery clerk's office is in a building separate from the courthouse, on the first Monday of August, to hear objections to the assessment. The board shall examine the assessment rolls, and hear and determine all exceptions thereto, and shall sit from day to day until the same shall have been disposed of, and all proper corrections made, or may take objections under advisement as provided in subsection (2) of this section. The board shall equalize the assessment and may increase or diminish the valuation of any property, so that property of the same value shall be assessed for an equal sum. Where an individual assessment has been increased immediate notice in writing shall be sent by mail to the person whose assessment is increased by the clerk of the board of supervisors. At the said meeting the board shall have the power to change erroneous assessments or to add omitted property but any person affected by such action shall have notice as next above provided. If the board adjourn before considering the objections filed, such objections shall be heard at the next regular meeting of the board.

(2) The board of supervisors may take an objection under advisement to allow the taxpayer or his designee, the tax assessor or the board to compile information relating to the objection; however, the board shall enter an order on the objection on or before the first Monday of September.

§ 27-35-93. Objections must be filed or assessment to stand.

A person who is dissatisfied with the assessment may, at the August meeting, present objections thereto in writing which shall be filed by the clerk and docketed and preserved with the roll. All persons who fail to file objections shall be concluded by the assessment and precluded from questioning its validity after its final approval by the board of supervisors or by operation of law, except minors and persons non compos mentis.
§ 27-35-95. Meeting not held; objections to assessments; notice given of proper time.

If from any cause the meeting of the board of supervisors at which objections to assessments should be heard, be not held, then all such objections shall be continued and may be heard at the next meeting of the board, either regular, adjourned, or special. If the board fails to give the proper notice to the taxpayers of the meeting at which objections are to be heard, the board shall immediately proceed to give such notice and shall fix the time when it will hear and determine all objections to the assessments therein contained, and the board shall proceed and deal with the roll, or rolls, with all the powers and duties as are now provided by law, except as to the time. If the board fails to hold any meeting, or give any notice, or to perform any other duty in reference to the assessment roll, or rolls, at the time required by law, such duty shall be performed at a later date upon the giving of proper notice to persons affected.
§ 27-35-97. Supervisors may require books and papers to be produced.

The board of supervisors may require any person, firm, corporation, or bank to bring their books before them while sitting as an equalization board or when hearing objections or complaints, or when sitting to carry out the orders of the tax commission, and such other papers as will fully inform them as to the true value of the property to be assessed. Any person or concern failing or refusing to comply with such demand shall be precluded from objecting to any such assessment.
§ 27-35-105. Approval of assessments.

Assessments must be approved by an order of the board of supervisors entered on the minutes; but the failure to make and enter such order shall not vitiate the assessment if it shall appear that the assessment was made according to law.
§ 27-35-119. Clerk of board of supervisors to mail notice to objecting taxpayer of adjournment of meeting at which final approval of roll entered; appeal from decision of board of supervisors by taxpayer.

(1) The clerk of the board of supervisors shall mail notice of the adjournment of the meeting at which final approval of the roll by the State Tax Commission is entered to any taxpayer who objects to an assessment. Such notice shall be accompanied by an affidavit from the clerk stating the date upon which such notice was mailed.

(2) Any taxpayer who feels aggrieved at the action of the board of supervisors in equalizing his assessments shall have the right of appeal to the circuit court in the manner provided by law, within twenty (20) days after the date the notice is mailed as provided for in subsection (1) of this section.

§ 27-35-121. Effect of appeal.

In case of an appeal from the judgment of the board of supervisors in the matter of an assessment, the appeal shall not delay the collection of taxes due by the assessment as approved. If such taxes be collected before a final disposition of the appeal, and the judgment be in favor of the person appealing, in whole or in part, as to the matter in dispute, any money improperly collected from him for taxes, as shown by the judgment, shall be refunded to him by the state and county respectively, if they have received the money; and, if it shall not have been paid over, the tax collector receiving it shall refund it to him. His claim, if against the state, shall be audited by the auditor, and a warrant issued for the amount after the auditor shall have submitted the matter to the attorney general, and obtained his opinion that it is a legal demand against the state; and the board of supervisors shall, after such allowance by the auditor, audit and allow the claim of the party against the county. If the case be decided in favor of the party appealing while the collector is proceeding with the collection of taxes, he shall conform his action to the judgment.

§ 27-35-143. Change of assessment in certain cases.

The board of supervisors of each county shall have power, upon application of the party interested, or by the assessor on behalf of such party, or otherwise as prescribed in Sections 27-35-145 through 27-35-149, to change, cancel or decrease an assessment in the manner herein provided at any time after the assessment roll containing such assessment has been finally approved by the State Tax Commission, and prior to the last Monday in August next, under the following circumstances and no other:

1. When the same property has been assessed more than once to one or more persons.

2. When a clerical error has been made in transcribing the assessment from the tax list to the assessment roll, or from the assessment roll to the copies, or in amending the original assessment roll, in making the equalization of assessments, or in carrying out the instructions of the State Tax Commission.

3. When an error in addition or multiplication has been made in the compilation of the tax list, roll or copy of the roll.

4. When there is an assessment of property which never existed, or was not owned by or in the possession of the party to whom assessed, on the next preceding tax lien date.

5. When the assessment is in the name of another than the owner of the property on the next preceding tax lien date.

6. When the assessment is so indefinite as to give a vague or imperfect description of the property assessed.

7. When the property assessed is nontaxable, or was not subject to taxation on the next preceding tax lien date.

8. When the property is not liable to a special district tax levy for which it has been assessed.

9. When the property, after the next preceding tax lien date, but before the payment of taxes due thereon, has ceased to exist, on account of death or destruction by fire, explosion, storm, flood, earthquake, lightning, or other inevitable accident or act of Providence; or has depreciated in value on account of any such accident or occurrence as the foregoing.

Provided, however, that where property has been insured the amount collected as insurance by reason of such loss shall be taken into account by the board in reducing the assessment, or refunding any tax payment thereon.

10. When the assessment does not show the correct number of acres, actually in the property described, or the correct quantity of any property.

11. When lands have been assessed and incorrectly classified; or when buildings and improvements have been assessed which were not on the land, at the preceding tax lien date; or where the buildings and improvements, at the preceding tax lien date, were exempt from assessment and taxation.

12. When the property has been assessed for more than its actual value; but in such cases the board shall require proof, under oath, of such excessive assessment by two (2) or more competent witnesses who know of their own personal knowledge that the property is assessed for a higher sum than its true value.

13. When the property has been assessed as subject to state taxes and is exempt; or when the property has been assessed as subject to county and district taxes and is exempt from such taxes.

14. When buildings and improvements have been assessed with the land, but are owned by someone other than the owner of the land.

§ 27-35-145. Application for change of assessment; hearing; order.

Any person desiring a change in assessment as provided in Section 27-35-143 shall make, in writing, an application in duplicate to the board of supervisors of the county where such assessment is made (or the tax assessor of the county may make such applications for him) on the forms prescribed, setting forth the grounds for the reduction, change, or cancellation claimed. At any meeting, either regular, special, or adjourned, the board of supervisors may hear and determine the matter and shall require such evidence as, in its opinion, is necessary to substantiate the application. If the board approves the application it shall adopt an order setting forth its conclusions, which order shall be dealt with as hereinafter provided. The state tax commission shall prescribe and furnish the forms necessary for complying with the provisions of this section.

Property owners should consult a lawyer before development.

Mississippi Landowner Fined for Filling Wetlands
Release date: 01/15/2010

Contact Information: Davina Marraccini, (404) 562-8293, marraccini.davina@epa.gov

(ATLANTA – Jan. 15, 2010) Rodney O. Corr will pay $100,000 for illegally filling wetlands on his property in Waveland, Miss., in violation of the federal Clean Water Act (CWA). The impacted wetlands are adjacent to Edwards Bayou, a tributary to the Jourdan River in Hancock County, Miss.

“By taking this enforcement action, we are sending a strong message about the importance of protecting wetlands across the Southeast,” said Stan Meiburg, EPA Region 4 Acting Regional Administrator. “Wetlands are important resources that serve as habitats for critical fish and wildlife and also help control floods, recharge groundwater, capture pollutants and cycle nutrients.”

Beginning in May 2004, Mr. Corr or those acting on his behalf illegally discharged fill material into approximately 14 acres of wetlands while using earth moving machinery to clear a site for commercial development. Mr. Corr did not obtain the required CWA Section 404 permit from the U.S. Army Corps of Engineers prior to performing this work.

Time to get those property taxes paid. Or face a penalty.

27-41-9
TITLE 27 TAXATION AND FINANCE
CHAPTER 41 AD VALOREM TAXES - COLLECTION
27-41-9. Interest on taxes due; extension of due date by proclamation.
(1) If any person fails to pay the tax levied and assessed against him when due, he shall be required to pay, in addition to the amount of taxes unpaid after February 1, interest thereon at the rate of one percent (1%) per month, or fractional part thereof, from February 1 to the date of payment of such taxes. When the due date for any payment shall fall on a Saturday, Sunday or legal holiday then the payment shall be received by the tax collector on the first working day after such day or days without any interest being owed by the taxpayer.

The interest charge of one percent (1%) shall be collected and apportioned and paid into the state, county, levee board or drainage district or municipal treasury. That portion paid into the county or municipal treasury shall be paid into the general fund of such county or municipality.

If any taxpayer neglects or refuses to pay his taxes on the due date thereof, the said taxes shall bear interest at the rate of one percent (1%) per month or fractional part thereof from the delinquent date to the date payment of such taxes is made; provided that because of unusual conditions in any county where neither the taxpayer nor the tax collector is negligent or responsible for the delay incident to such tax payments, the Governor of the state may by proclamation before, on or after the due date of such tax payments extend the time for the imposition of this penalty for a period not to exceed sixty (60) days, and if necessary, for two (2) additional periods not to exceed sixty (60) days each.

(2) Such proclamation shall be filed with the clerk of the board of supervisors of the county affected thereby and shall not become effective until so filed. The proclamation shall be spread at large upon the minutes of the next regular meeting of the board of supervisors held after the date of the filing thereof.

Sources: Codes, 1942, § 9895; Laws, 1934, ch. 188; Laws, 1936, ch. 303; Laws, 1944, ch. 204, §§ 1, 2; Laws, 1982, ch. 346; Laws, 1985, ch. 396; Laws, 1986, ch. 460; Laws, 1991, ch. 521, § 1; Laws, 1992, ch. 406, § 1; Laws, 1995, ch. 468, § 4; Laws, 1999, ch. 391, § 1, eff from and after passage (approved Mar. 16, 1999.)

Ten Steps to Buying a Business

Step One. Assemble a Team

Buying a business can be a time consuming and confusing process, particularly for the uninitiated. Before proceeding, a wise buyer assembles a team of experienced advisers familiar with the process by which businesses are bought and sold. Team members ordinarily would include an accountant, tax adviser and attorney. Others could include a business valuation expert, environmental consultant and other professionals with particular expertise.

Step Two. Determine the Type of Business to Buy

First, decide the general category of business. For example, service, manufacturing, internet, retail. Then consider the specific type of business, such as software developer, flower shop owner, shoe seller. Decide on the size of the business in terms of sales, profits, and the number of employees. Decide whether to seek a business that is profitable and stable or one that is losing money and in need of new management. The more profitable and stable a business, the more it will cost. If you plan to buy a business outside your area of expertise, you should make certain that key employees will stay on after the change in ownership or that similar expertise can be hired.

Step 3. Find a Business for Sale

Possible sources include business owners, business brokers, investment bankers, print advertising, trade sources and your attorney, accountant and other contacts in your network. Do not overlook any possibility in conducting your search. Business owners are often the best sources of industry information and may be willing to give free advice. Trade sources can be a viable source of information on businesses for sale. Key people within an industry, including suppliers, often know when businesses come up for sale or which owners might be willing to sell if the right offer were presented.

Step Four. Investigate the Business

Preliminary investigation may be conducted prior to making an offer or signing a letter of intent. More complete investigation is undertaken prior to the closing. The major areas to be investigated include the Seller's financial statements; the status of pending or threatened litigation; business relationships with suppliers and customers; tax matters; the competitive situation; employee relations and benefits plan matters; status of trademarks, patents, copyrights, trade secrets and other intellectual property; corporate, government and regulatory compliance; warranty and product liability issues; and potential environmental liabilities.

Step Five. Value the Business

Rules of thumb and valuation formulas are a starting point in determining the value of a business. The most useful of these may be the discounted cash flow method which is used to calculate the net present value of the future cash flows of a business based on certain assumptions. Remember that value is not the same as the price that is paid for a business. For many reasons, such as the relative bargaining positions of the parties and the skills of their negotiators, businesses are often purchased for more or less than their valuations. Nonetheless, having an accurate picture of the value of a business is essential in determining whether and how to proceed.

Step Six. Make an Offer

This is ordinarily done by presenting the Seller with a letter of intent that serves to outline the agreement of the parties on fundamental issues and commits the parties to an exclusive period of negotiations. Price is the central bargaining issue in the transaction, but price cannot be understood without thinking about terms. Terms are often more important than price. It makes a big difference, for instance if a $10 million dollar offer is for stock or assets. The tax consequences for buyer and seller are significantly different depending on the choice. For example, an asset purchase is better for the buyer because of a step up in basis and worse for the Seller because of double taxation. Similar considerations apply to liability issues and the timing and type of payments to be made. For instance, asset deals leave the seller exposed to liabilities that are not assumed by the buyer. Stock deals require the buyer to assume the liabilities of the business. Installment payments are worth less than the same amount paid at closing. Payment in stock of the buyer brings its own set of valuation issues.

Step Seven. Negotiate Definitive Documentation

The Purchase and Sale Agreement can be a complex document. The major bargaining issues include: price; structure; seller's representations and warranties; the conduct of the parties pending the closing; and conditions to the closing. In a sense, the entire negotiation process involves the apportionment of liabilities between buyer and seller. This process often is crystallized in a hotly contested negotiation of the agreement's indemnity provisions. The parties must agree on who is to bear the risk of post-closing liabilities, both those that have been disclosed and those which are contingent or unknown. The seller wants to sleep at night. The buyer counters that the buyer is paying good money for a business that exists as the Seller has described. The buyer wants protection if the business turns out not to be as advertised. Resolution usually involves agreement on time limits for making claims and limits on the seller's exposure for certain types of liabilities.

Step Eight. Arrange Financing

The buyer's sources of financing depend in part on the size of the business being purchased. The larger the business being acquired the more sources that are available. Not only does the willingness of a particular lender to participate in the transaction increase, the number of potential lenders increases. Banks, insurance companies, commercial finance companies and venture capital companies all may be interested in providing financing for a larger acquisition. Many smaller businesses are purchased with a significant portion of the purchase price financed by the seller. The buyer, however, usually is required to make a down payment and ensure that adequate working capital sources are available. If the funds needed for the down payment are not readily available, the buyer must look for financing from an outside source.

Step Nine. Satisfy Closing Conditions

In addition to obtaining financing, there will be several other conditions that must be satisfied before the purchase is closed. Typical closing conditions include: satisfaction with the results of the due diligence investigation; receiving required opinions, approvals and consents; entry into ancillary contracts; and the absence of certain events such as threatening litigation. Typically, buyer and seller cooperate to satisfy the closing conditions in advance of an agreed upon closing date.

Step Ten. Close the Deal

When the closing date arrives, and all of the conditions to the closing have been met, save those that will be satisfied at the closing, the parties and their representatives ordinarily assemble and lay out the paperwork. In neat piles on tables are found bills of sale, required consents, officer's certificates, opinions of counsel, and other transfer memorabilia. After dealing with the inevitable last minute snafus, documents are signed, wire transfers are completed and the business changes hands.

Self-Directed IRA's

Background:

An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. The account is created by a written document. The document must show that the account meets all of the following requirements.

• The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.

• The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount.

• Contributions, except for rollover contributions, must be in cash.

• You must have a nonforfeitable right to the amount at all times.

• Money in your account cannot be used to buy a life insurance policy.

• Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund.

• You must start receiving distributions by April 1 of the year following the year in which you reach age 70½.

Advantages to Self-Directed IRA:

One of the main advantages of a self-directed IRA is it allows account holders to achieve diversification; account holders can make both traditional and alternative investments within self-directed IRAs.

Many people who purchase real estate within self-directed IRAs buy with cash, therefore the rental income generated is profit back into the IRA, and allows for consistent cash flow for these retirement investments. People may engage in lending by originating mortgages for homeowners or lending money to 3rd parties for business activity or things of that nature.

Prohibited Transactions:

Any transaction that can be construed as providing immediate personal financial gain to a self directed account holder is not allowed, and is often referred to as ‘self-dealing’. Examples of self-dealing would include: borrowing money from your IRA, selling property to your IRA, receiving a current benefit outside the IRA from assets in the IRA, or using the IRA as security for a personal loan.

In addition, direct investments of self directed funds in any of the following categories are prohibited:

• Life insurance;
• Collectibles such as works of art, rugs, antiques, metals (other than gold, silver and palladium), gems, stamps, coins (except certain U.S. minted coins), alcoholic beverages, and other tangible property; and,
• Sub-Chapter S Corporations or any other categories as may be defined by the Secretary of the Treasury.

Examples of prohibited transactions with an IRA include: borrowing money from it; selling property to it; using it as security for a loan; or buying property for present or future use with IRA funds.

For IRAs, a disqualified person is:

• The IRA holder and his or her spouse;
• The IRA holder’s ancestors, lineal descendants and their spouses;
• The IRA holder’s investment advisors and managers;
• Any corporation, partnership, trust or estate in which the IRA holder has a 50 percent or greater interest; and,
• Anyone providing services to the IRA such as the trustee or custodian.

(There are entire books written on the Prohibited Transactions)

Safety at Arm's Length:

Direct Buying/Selling of Real Estate to and from non-family;
Lending to non-family;
Investment in private equity not held by family.

More creative ways to enter into transactions have been thought of, but its always good to steer clear of the gray area, especially with the IRS. (You've been warned!)

Does it make sense?

If you are looking for just tax savings consider these tax issues on top of the prohibited transaction rules.

UBTI is income generated by a trust when engaging in business activity that is unrelated to its general purpose. Self-directed IRAs were created for long-term investing, and when it purchases an asset that produces income unrelated to the intent of the "plan," then that income is subject to taxation – which means your IRA will be paying taxes on profits generated from your business purchase.

UDFI stands for Unrelated Debt Financed Income. UDFI is income generated by an IRA, or other retirement plans, through debt-financing or leverage. UDFI is taxed much like UBTI and is similarly as complicated. UDFI only applies to the profit realized through debt and is based on the highest amount of leverage carried within the past 12 months. Refer to IRC § 514(a) (1).

These two types of taxes are somewhat more complicated, and a tax specialists should be consulted before engaging in active income based investments, or debt leveraged income based investments.

Have you investigated the additional cost for administration? ($1,000/year is possible)

Consider that the 1031 exchange transaction could yield a tax savings, and offer less complicated tax analysis and less fees.

SUMMARY:

The self-directed IRA can be a useful tool for expanding your investment portfolio, but consider the administrative and compliance cost before you leap.

Property Tax Time!

January brings new hope for the new year, and the tax collector:

City property taxes. How its done.

§ 21-33-1. Property subject to assessment.

All lands and other taxable property subject to assessment, held by any person within the municipality, or in added territory, on the first day of January, shall be assessed, and ad valorem taxes thereon levied and collected for the ensuing year, excepting motor vehicles as defined by the "Motor Vehicle Ad Valorem Tax Law of 1958."

When is the assement done?

§ 21-33-23. Filing assessment rolls.

The assessor shall complete the assessment of both real and personal property and file the rolls with the municipal clerk on or before the first Monday in September. The governing authorities may, by an order entered upon their minutes, allow the assessor additional time within which to complete and file the assessment rolls. The assessor shall attach his affidavit to each roll in the form required of the county tax assessor.Municipalities operating under a private charter, and having a different time for the assessment of property than fixed for municipalities operating under a code charter, shall provide the time when the assessor shall make and file the assessment rolls.

What if I disagree with the assessment?

§ 21-33-10. Amending roll; objections; appeals

The governing authority of any municipality which adopts the part of the county assessment roll containing the property located within the municipality as provided in sections 21-33-9 and 27-35-167 shall not correct or revise such assessment roll except for the purpose of conforming the municipal assessment roll to corrections or revisions made to the county assessment roll. The governing authority of such municipality shall not meet to hear objections to the assessment roll.

All objections to the municipal assessment roll shall be heard by the board of supervisors at the time and in the manner that objections to the county assessment roll are heard. The board of supervisors shall notify, in writing, the municipal governing authority and the municipal tax assessor of any corrections or revisions made by them to the part of the county assessment roll adopted as the municipal assessment roll. Any taxpayer feeling aggrieved at the action of the board of supervisors in equalizing his assessments shall have the right to appeal to the circuit court as provided in section 27-35-119.

That objection didn't work now what?

§ 27-35-119. Notice of adjournment of meeting at which final approval of roll entered; right of appeal(1)

The clerk of the board of supervisors shall mail notice of the adjournment of the meeting at which final approval of the roll by the State Tax Commission is entered to any taxpayer who objects to an assessment. Such notice shall be accompanied by an affidavit from the clerk stating the date upon which such notice was mailed.(2) Any taxpayer who feels aggrieved at the action of the board of supervisors in equalizing his assessments shall have the right of appeal to the circuit court in the manner provided by law, within twenty (20) days after the date the notice is mailed as provided for in subsection (1) of this section.

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