Pub. 1 2016 Issue 5

7 ISSUE 5 2016 WHY PROPERTY CLASSIFICATION MATTERS Property Classification | Continued on page 8 䌀吀䄀䄀 吀䠀䔀䌀伀一一䔀䌀吀䤀䌀唀吀䄀倀䄀刀吀䴀䔀一吀䄀匀匀伀䌀䤀䄀吀䤀伀一  T he market provides the only concrete way to determine the actual value of a property. If someone will buy or rent a property for a speci c amount of money, well, then that is what that property is worth … at least until the next time it is sold or rented. Unfortunately, a property’s price tag when it sells isn’t much help when it has been a while since it was on the market, or when market forces have thrown values o . • e most expensive property on the market used to be a triplex penthouse in London that sold for $221 million in 2011 at the One Hyde Park Development. • In December 2015, that record sale was broken by a Chateau Louis XIV mansion near Paris with a 56-acre park that is located between Versailles and Marley-le- Roi. e price tag for the mansion was $301 million. Admittedly, it has an aquarium, a cinema, a wine cellar, a fountain with gold leaf on it, marble statues, a maze built with hedges, and bridle paths. e mansion and its undoubtedly beautiful, expansive setting took three years to create. Here’s a question for you: Does the mansion make the triplex less valuable? And when the Louis XIV mansion sells in years to come, what if there is no one who can a ord to pay $301 million for a building that is no longer the oldest and grandest around? e relative and changing value of real estate su ers from the same problem you nd in the art world. A work of art might be worth millions, for example, but not if no one can a ord to buy it because of a recession, a depression, or a war. Even restoration has its hazards: • Greek statues were originally painted. Art curators in the 1800s blasted the paint away because they liked the idea of a nice, white statue better than a painted one.