A California listing agent is preparing a CMA for a property in a neighborhood where the local city recently enacted a vacancy tax on vacant residential properties. Two comparables are available: one was occupied at the time of sale and one had been vacant for over a year and subject to the vacancy tax. How should the agent handle this difference in the CMA?

Correct Answer

A) Use both comparables and note the vacancy status, but recognize that the vacant property may have sold at a discount due to the additional tax burden and carrying costs

Several California cities (including San Francisco, Oakland, and Los Angeles) have enacted vacancy taxes on residential properties. A property subject to a vacancy tax has additional carrying costs that may motivate the seller to accept a lower price. The CMA should consider both comparables and note that the vacant property's sale price may reflect a discount due to the vacancy tax burden and associated carrying costs.