As a general rule, only income directly attributable to real estate is considered assessable. Income attributable to the business enterprise, personal property, or to management of the course is considered non-assessable income.
To properly analyze income from a golf course, the assessor should take these two factors into account:
- Since investors in golf courses base their purchase price on the expected net income, a good way to value property is to employ a method that follows the rationale and actions of the marketplace. Therefore, the valuation method described in this guide is based on determining net income.
- From an assessment perspective, income analysis should capture all interests in the property. Therefore, all potential income should be analyzed.
The market value of a property for assessment purposes is a “fee simple” interest. A fee simple title is regarded as an estate without limitations or restrictions. The Appraisal Institute of Canada has defined fee simple interest as:
"An absolute fee; a fee without limitations to any particular class of heirs and restrictions, but subject to the limitations of eminent domain, escheat, police power, and taxation. An inheritable estate."
In other words, fee simple interest reflects the ownership of all of the rights inherent in the real estate, including the right to use the property, sell it, lease it, etc.
In a private or semi-private golf course where actual average green fees can be difficult to derive, it may be necessary to attribute the potential value based on the potential market revenue as of the valuation date. The analysis of potential income from the market, as opposed to application of actual revenues, will capture the fee simple of the course in its most profitable use as of the valuation date. |
