Academic journal article ABA Banking Journal

That's Not a Closed Branch - That's a Tax Break

Academic journal article ABA Banking Journal

That's Not a Closed Branch - That's a Tax Break

Article excerpt

"Economic obsolescence" is a term that doesn't exactly roll off the tongue. But it's one that bankers trimming their branch systems could get to like the sound of.

That's because economic obsolescence of branches being sold as nonbanking property may qualify them for lower property tax treatment in the period between their being shuttered and being sold, according to accountant Robert C. Dunlap of KPMG Peat Marwick LLP. And this is a break some banks may be missing.

"Most bank branches, when they are taken out of commission, are taken out of being a bank branch for anybody," says Dunlap, partner in charge of the firm's Phoenixbased Property Tax Practice. "We see bank branches becoming dry cleaners, post offices, even Chinese restaurants. The branches sell for less because they won't be used as bank branches." In some cases, there is simply no demand for a bank branch, while in other cases a bank prefers to take a branch out of the picture rather than hand the location over to a competitor. Dunlap says bank properties are selling for as little as a third of their original cost in some markets.

Once a branch is out of business, its market value is lower, Dunlap argues. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.