Commercial Property Tax Assessed Values and Appeals During the Most Unusual Time

While you and your business were out of the office, you may have received your commercial property tax assessment.

Don’t let your 2020 tax assessment get buried in the inbox. You could risk your ability to protest if you miss important deadlines.

Even though some jurisdictions are experiencing delays in issuing property tax assessments for tax year 2020, property owners still have only 30 days from the notice issue date to file a property tax appeal.

With rising real estate values in many parts of the country, it is not unusual to see increases in tax assessments for commercial property, given that the January 1, 2020 assessment date is prior to the outbreak of the COVID-19 pandemic.

Here are some items to consider as you review your real estate property tax assessments:

Simple errors. It's possible for assessors to make errors in the physical descriptions of properties. They may list a commercial property as being 10,000 square feet, when it is actually only 9,500. Other common mistakes include errors in building classification that could have a significant impact on your assessed value. For example, your building could be listed as a Class A (a building with superior steel and concrete construction) when it is actually a Class B or C building with a much lower replacement cost.

Improvements. The bill may include assessments for improvements that were never made or are not completed. For example, you are renovating office space that is not yet complete.

Comparable properties. Do you know of similar properties in the same area that are valued differently than yours? The properties should be truly comparable. A retail business isn't the same as industrial property and a storefront can't be compared to a store located in a mall. Unlike homes, which are often built in homogeneous tracts and therefore can easily be compared to surrounding properties, commercial property is considerably more difficult to match.

Special exemptions or credits. Check into whether you are eligible for special rates or credits. Like residential property, some jurisdictions have special provisions for property based on use and location. 

Tax Rates. If you find that you're paying more taxes per square foot than a comparable, older store down the street, check to make sure that different tax rates haven't been grandfathered in.

Peer-to-Peer Discussions. Discuss your tax bill with similar commercial operations in your area that aren't competitors. This can help each business determine whether it is paying more than its fair share.

Don't assume that any errors you find are new. Just because your values are unchanged from previous years doesn't mean they are right. 

How to Appeal 

Different jurisdictions have different systems for tax assessments and appeals. You can generally pursue tax relief in one of two ways:

Negotiation. The most common remedy is to ask for a negotiation with your local tax authority. Be sure you have documentation for your claims, such as photographs, comparable sales lists, and property records that show discrepancies.

Appeals or protests. Many but not all states hear property tax appeals or protests based on a comparative analysis. A successful appeal can lower your current and future taxes significantly. You may also be able to appeal past property tax bills and get refunds. 

As a last resort, if you have substantial proof of an incorrect property valuation but are unable to succeed through negotiation or appeals, you may want to take your case to court. Your CPA or attorney may be able to assist you in proving the true valuation of your property and handling the appeal.

Weaver’s tax professionals are here to help you review property tax assessments and bills for errors and to perform the analysis necessary to ensure a fair assessment. Contact us to examine your situation and find out how we might be able to help.

© 2020

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