Property Tax Resources

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Georgia Property Tax Updates

UPDATED december 2020

Taxable Estate for Years or Non-Taxable Usufruct?

In Chatham County Board of Assessors v. Jay Lalaji, Inc., Airport Hotels, 2020 Ga. App. LEXIS 557 (Case No. A20A0867), decided on October 7, 2020, the Georgia Court of Appeals affirmed the trial court’s grant of the hotelier’s motion for summary judgment in an ad valorem real property tax appeal based on the ruling that his interest in the premises at issue constituted a non-taxable usufruct. The Court examined five factors in its determination that the taxpayer’s interest in the 50 year lease agreement with the Savannah Airport Commission was a usufruct instead of a taxable estate for years. The Court noted: 1) the terms of the agreement established a limited series of rights in Lalaji and an implicit retention of all other rights in the Commission; 2) the agreement provided that Lalaji was liable for payment of taxes if they were lawfully assessed upon the leased premises; 3) the Commission retained significant dominion and control over the property including restrictions on Lalaji’s use of the land, the Commission’s right of access for inspections, utility easement retention, and title in the improvements vested in the Commission upon expiration of the lease; 4) the Commission had significant authority governing maintenance and control of how any improvements were to be made upon the land; and 5) the agreement expressly prohibited Lalaji from subletting the premises or assigning or transferring any of the rights under the agreement without the Commission’s consent. The Court concluded by holding that the restrictions imposed upon Lalaji’s use of the premises “are so pervasive as to be fundamentally inconsistent with the concept of an estate for years” and because Lalaji “has only a circumscribed interest and limited use of the premises, the agreement amounts to a usufruct.”

Lisa F. Stuckey
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)

Florida Property Tax Updates
Idaho Property Tax Updates

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