OLR Report 2013-R-0273 explains the different ways in which states require golf courses to be assessed for property tax purposes and (2) whether floodplains impact their assessments.
Most states require real and personal property, including golf courses, to be assessed based on fair market value. Tax assessors use three standard approaches to calculate that value: the market, income, or cost approach. According to the National Golf Course Owners Association (NGCOA), the most common assessment method for golf courses is the cost approach. Assessors may also use the income and market approaches if certain data are available.
Many states have enacted preferential tax treatment programs for certain land uses, including golf courses and other open space or recreational land, that provide an economic incentive to property owners to preserve the land for open space or recreational purposes. These programs commonly require specified land uses to be assessed based only on the value of their existing use (i.e., current use value), rather than their fair market value, which could be potentially higher. The current use assessment generally applies to the unimproved sections of a golf course; Clubhouses and other buildings and improvements are assessed based on their fair market value.
We identified at least 23 states that assess golf courses and other open space or recreational land uses based on their current use value. Of these states, seven specifically name golf courses as eligible for such preferential treatment. We identified four states, Arizona, Hawaii, Maryland, and Nevada, where golf courses are the only recreational land use eligible for current use assessment.
The methods assessors use to calculate current use value under these preferential treatment programs vary. Some states establish a limit on the value or prescribe the value to be used. Others specify that assessors must use the market approach to value open space land. A few states prescribe methods specifically for valuing golf courses. Arizona, for example, establishes a $500 per acre value on the assessment of golf course playing, practice, and parking areas and requires the value of each golf course hole to be capped at its estimated 1988 replacement cost. Nevada, on the other hand, sets a $3,432 per acre cap (annually adjusted for inflation) on golf course open space land.
We also identified two other states, Indiana and South Carolina, that provide other forms of preferential tax treatment for golf courses. Among other things, both states require assessors to exclude the value of personal property, and any income derived from it, when valuing golf course property.
As to whether a floodplain on a golf course's property affects its assessment is fact specific, depending on the course's physical and economic characteristics and the variables the assessor considers when valuing the property. Consequently, it is hard to generalize about how floodplains affect golf course value.
For more information, read the full report.
