Georgia Power Leasehold Vs. Fee Simple Ownership: What are the differences?
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Leasehold vs. Fee Simple Ownership
12 June 2018 - 19:58, by , in Uncategorized, Comments off

Many potential buyers of Lake Burton, Seed Lake, and Lake Rabun properties ask us: “What is the difference between a fee simple lot and a Georgia Power lease lot?”. Please see the descriptions of each lot type below:

Fee Simple: Fee simple ownership is probably the most familiar form of ownership to buyers of residential real estate. Depending on where you are from, you may not be familiar with any other form of real estate ownership. Fee simple is sometimes called ‘fee simple absolute’ because it is the most complete form of ownership. A fee simple buyer is given the title (ownership) of the property, which includes the land and any improvements to the land in perpetuity. No one can legally take real estate from an owner with fee simple title with few exceptions including eminent domain. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes— sell it, give it away, trade it for other things, lease it to others, or pass it to others upon death. 

Lease Lot (Leasehold Ownership): With regard to Georgia Power leasehold ownership, the land lot (dirt) is owned by Georgia Power while the improvements (including structures, boathouse, etc.) are owned by the leaseholder (purchaser). Georgia Power has a standardized 15-year lease agreement (with a guaranteed 15-year renewal) on the property. The property lease then renews every 15 years. Lease payments are made to Georgia Power annually. For 2018, the payment structure for a new lease is structured as follows: $1100 a year for the first 5 years, $1200 a year for the next 5 years and $1300 for the final 5 years. Georgia Power has established a lease transfer fee that is relevant solely to leasehold properties. The transfer fee is negotiable between a buyer and seller of leasehold property and is due in full to Georgia Power each time a leasehold property is transferred from one leaseholder to a new leaseholder. For 2018, most Georgia Power leasehold lots have a standard transfer fee of $20,000. 

Taxation of Georgia Power leasehold properties differs from fee simple properties. For leasehold properties, the Georgia Department of Revenue taxes Georgia Power for their land holdings. Georgia Power has defined a valuation of each lake lot they own and they “passthrough” a lot assessment to the Leaseholders of individual leasehold lots each year to account for this taxation. So, owners of leasehold properties on our area lakes receive a property tax bill from Rabun County that taxes various property improvements (house, boathouse, etc). In addition to that property tax bill, they also receive an annual lot assessment from Georgia Power to cover the passthrough of property tax for the land lot. Fee Simple lot owners receive one annual tax bill from Rabun County that includes tax for both the land lot and improvements.

For additional information regarding Georgia Power leasehold ownership, we encourage you to visit the Georgia Power Shoreline Management Guide. 

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