Press Release: July 15, 2005
CONDEMNATION RULING BY COURT NOT ENTIRELY BAD
Charlotte Business Journal
VIEW POINT - EDITORIAL
by Stephen L. Smith, Horack, Talley, Pharr & Lowndes
You've likely heard about the recent US Supreme Court decision that expanded the right of cities and counties to condemn private property for public use. The city of New London, CT wanted to acquire a tract that included many private homes to allow for a more upscale private development. The court decided a local government could condemn such a site if it believed the more was beneficial to citizens and the owners were paid fair value for their property.
Why should you care? Because the amount of condemnation activity going on in Charlotte and Mecklenburg County. Think of the impact of Interstate 485 and the property condemned there. Or drive up South Boulevard to see the property condemned for the light-rail corridor.
The most interesting question is whether anyone will challenge this tool.
If you happen to be on the receiving end of a condemnation notice, there are a few points to keep in mind:
- Once your land is targeted, it is usually difficult to avoid condemnation. The real battle is over how much the government will pay you for your property.
- When a governmental entity intends to condemn your property, you are entitled to receive fair-market value without regard to why the property is being condemned.
- The sum you're paid in excess of your basis in the property is a taxable gain. But there is a way to avoid the tax by reinvesting the proceeds in a new property.
While a condemnation notice initially appears intimidating, it can open a great many opportunities, allowing you to change the location of a business, buy a new home or get out of an existing business and invest in income-producing real estate instead, Sot the Supreme Court decision may not be all bad news.
Steve Smith is a tax attorney with Horack Talley in Charlotte. He can be reached at ssmith@horacktalley.com.
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