Problem: You are modeling the acquisition or development of a property that benefits from a real estate tax abatement, and want to make sure that you are reflecting the eventual phase-in properly.
REFM 60-Second Skills Solution: Set up a simple table with the tax abatement percentage for each year, and then run a VLOOKUP to reference the year in the projection model in each period, and multiply the would-be total real estate taxes by (1- that year’s abatement rate).
A simple table to show the real estate tax abatement rate
Nuances to note: the exact timing of when the abatement commences (start of construction, first Certificate of Occupancy, etc.) and the appropriate real estate tax rate to apply in each year of the abatement.
