(dissenting). I respectfully dissent. In my opinion, the majority, by accepting the Tax Tribunal’s determination of true cash value, includes within the assessed value of the property favorable financing terms and tax benefits derived by the buyer and does not reach a valuation of the property qua property.
An examination of the "comparable sales” used by respondent’s assessor (and by the Tax Tribunal) to reach a market approach valuation reveals that none of these sales represented true cash purchases. In each case, a minimal cash payment was made to the seller, and the existing balances on various Farmers Home Administration (FmHA) mortgages were assumed. As the majority opinion shows, FmHA mortgages are on extremely favorable terms in respect to interest. Furthermore, the FmHA mortgages are amortized over a period of 40 or 50 years. .1 agree with the majority that a willing buyer would very likely "pay” the amounts determined by the Tax Tribunal to represent the true cash value of the subject property in 1978 and 1979. However, I believe that no willing buyer would expend these amounts but for the financing *635terms available because of the FmHA mortgage. That is, while in 1978 a buyer might well have contracted to buy the property for. $1,740,000, putting down some small percentage of this amount in cash and paying off the balance with the low interest rate over 40-odd years, no buyer would have given $1,740,000 for the property in an all-cash sale.
In my opinion, the commercial context of this taxation problem has obfuscated the point I make in the preceding paragraph and possibly has led my learned colleagues astray. I offer the following hypothetical situation involving identical tract houses sitting side-by-side in the same subdivision to more clearly delineate what I perceive to be the error in the majority opinion. Suppose both houses are for sale. Seller A is a relatively well-to-do retiree who does not immediately need the sale price of his home. Indeed, A is happy to take monthly payments from a buyer over a period of years and would consider these payments a pseudo-annuity. A wants to move to Florida and would like to sell his house quickly. Seller B, on the other hand, needs the entire sale price from his house forthwith. B plans to use the proceeds of the sale to embark on a new business venture. Furthermore, B can offer no creative financing arrangements.
A contracts with C for the sale of his house. C can only make a $10,000 down payment. However, C recently has been promoted within his corporation and has received a 50 percent increase in salary. The contract price for the sale of the house is set at $80,000. Of this amount, C puts down his $10,000 and agrees to pay the remainder at 7-1/2 percent interest over 25 years. B contracts with D. However, D must obtain a 30-year, 16 percent *636conventional mortgage to buy B’s home. Thus, the contract price established for the house is $65,000. As I read the majority opinion, A’s house would be assessed at a true cash value of $80,000. I believe, however, that what A’s buyer, C, has really purchased is a house along with favorable financing terms.
The courts of this state have held in various opinions that sales price does not necessarily determine the true cash value of property. See, for instance, Fisher-New Center Co v State Tax Comm, 380 Mich 340, 362; 157 NW2d 271 (1968). In Village Green Co v Derderian, 67 App Div 2d 714; 412 NYS2d 421 (1979), a panel of the appellate division of New York’s Supreme Court was faced with a problem very similar to that confronting us. There, the lower court had disregarded the sales price of $1,065,000 when it valued the subject property. The court stated in a memorandum opinion:
"At the time of the sale, there was a favorable 7% mortgage on the premises for about $459,000. The purchaser paid $170,000 in cash and was given a remarkable purchase money mortgage of about $416,000, which, among other things, forgave all interest and payments for five years and then required payments at the rate of 4% for the next 10 years. The purchaser was also entitled to a $100,000 prepayment discount should it choose to pay within five years of the closing. Given the terms of the purchase money mortgage, the trial court was justified in finding that the connection between the purchase price of the property and its true fair market value was tenuous.” Id.
The underlying premise of Derderian, which I adhere to, is that market sales data will not reflect the true value of the property when a nonmarket mortgage is assumed as part of the transaction.
*637Apart from the favorable financing terms, the Tax Tribunal also included within its determination of the property’s true cash value income tax benefits derived by the buyers. The respondent’s appraiser was forthright in admitting that the tax benefits which a high-tax bracket buyer could obtain in the acquisition of an FmHA property was included in his valuation determination. In his report the city’s appraiser stated that the market value of FmHA properties are strictly as tax shelters and that, consequently, the appraisal was based upon this tax avoidance consideration. I do not believe the time has come that realty should be assessed in accordance with the tax benefits to be derived by the property’s owner. The notion that federal tax benefits are a proper consideration in making property assessment decisions has been explicitly rejected by courts in other jurisdictions. In Borough of Fort Lee v Hudson Terrace Apartments, 175 NJ Super 221, 225-226; 417 A2d 1124 (1980), the court stated:
"We find no merit in the borough’s claim that it was error to deny it access to the income tax returns of the taxpayer, Hudson Terrace Associates, for the tax years involved. The fact that some investors in income-producing real estate, such as the apartment buildings here involved, actually consider the income tax benefits to be derived by them personally in deciding whether to purchase such property, or do receive such benefits, has no place or relevance in the proper determination of the true value of the property by any of the conventional approaches to value. Accordingly, no purpose would have been served by allowing the borough to inspect the income tax returns sought by its motion. It is obvious that whatever income tax benefits a taxpayer may derive from his ownership of real estate will depend upon facts peculiar to him, such as his income tax bracket for the particular year, the method of *638depreciation used and the current and unpredictable future provisions of the Federal income tax laws.”
Once again returning to my hypothetical involving residential properties, suppose A’s buyer, C, used one of the rooms in the house as a home office. Under the majority’s decision, the assessing unit would have a good claim that the federal tax benefits which C would derive from his home office must be considered in determining the value of the property.
MCL 211.27(4); MSA 7.27(4) requires each assessment to be made at 50 percent of the property’s "true cash value”. MCL 211.27(1); MSA 7.27(1) basically defines true cash value as the usual selling price of a property in a nonforced, arm’s length transaction. In rendering their decision, I believe that my colleagues neglect to give effect to the crucial word "cash”. I agree with the majority that projects of the type under consideration here usually are sold with the attendant financing terms discussed earlier in this opinion. However, this "usual selling price” is not really a "cash” sale. I believe it is erroneous to equate a sale of property in which nonmarket mortgages are assumed as a sale indicative of "true cash value”.
As the author of Congresshills Apartments v Twp of Ypsilanti, 102 Mich App 668; 302 NW2d 274 (1981), I am dismayed to see it cited as support for the proposition that the Tax Tribunal reached a proper determination of true cash value in this case. There is a significant difference between the consideration of the actual economic circumstances of the property and the consideration of favorable financing terms and tax benefits. Indeed, this fact is recognized in MCL 211.27(1); MSA 7.27(1), which provides in pertinent part:
*639"In determining the value the assessor shall also consider the advantages and disadvantages of location, quality of soil, zoning, existing use, present economic income of structures, including farm structures and present economic income of land when the land is being farmed or otherwise put to income producing use, quantity and value of standing timber, water power and privileges, mines, minerals, quarries, or other valuable deposits known to be available in the land and their value.”
The quoted portion of the statute specifically requires that the "present economic income of structures” be considered by the assessor. The statutory provision does not state, however, that financing and tax factors should be evaluated by the assessor. I agree with the hearing officer, who found for the petitioners, that an evaluation of the full set of contractual rights and obligations, financing terms, and tax benefits is well beyond the scope of the expertise of the average real property assessor.
The majority notes that there are three accepted methods for determining "true cash value”: the market approach, the cost of reproduction approach, and the capitalization of income approach. My colleagues further note that it is the duty of the Tax Tribunal to select the approach which is most accurate under the circumstances. Wolverine Tower Associates v Ann Arbor, 96 Mich App 780, 782; 293 NW2d 669 (1980).
In my opinion, the market approach used here is inappropriate. The value of the subject property was based on a comparison of other FmHA projects not truly sold for cash. In reality, the respondent’s appraiser presented no valid comparable sales figures because there were no cash sales. Instead, each sale used by the city involved the buyer’s assumption of a long term, low interest rate mortgage.
*640Initially, the city presented a cost of reproduction approach for determining the subject property’s value. I also believe that this approach is likely to prove unsatisfactory because the value of a subsidized low-income housing project seldom equals the cost of its construction. See, Washbridge Housing Corp v Tax Comm of the City of New York, 60 Misc 2d 296; 303 NYS2d 308 (1968), aff'd 303 NYS2d 336 (1969). Indeed, this is a major reason that the federal government must provide substantial financing benefits to developers to get them to construct such housing.
While the capitalization of income approach also suffers from problems when applied in the context of federally subsidized housing, I believe it is the most likely method of accurately determining true cash value. The problem with the capitalization of income approach is the difficulty in determining what capitalization rate should be used. We did not discuss this factor in the capitalization of income equation in Congresshills because the capitalization rate utilized was not raised as an issue. I recognize that there may be difficulties in determining the proper capitalization rate, but at this time I make no comment on how this figure should be derived. Instead, I leave this problem to some future case where the capitalization rate is really the critical issue.
I would reverse and remand this case for further proceedings.