You’ve been hit with a massive increase in your commercial property tax assessment this year. Now what? Many companies don’t realize they have a statutory right to appeal their tax assessment.
The appeal process is complex, and if it’s not handled properly, you could end up with an unfavorable outcome or simply wasting your time. To realize your best chances of winning the appeal and lowering your commercial property tax payment, you must develop a strong, compelling and compliant presentation to support your case. Explore three tips that set you up for a successful commercial property tax appeal.
1. Learn The Tax Appeal Process
There’s no better way to prepare for your commercial property tax appeal than by familiarizing yourself with the appeal process. There are specific filing deadlines that vary from county to county and from state to state. Be sure to act swiftly. In some jurisdictions, deadlines are soon as 15 days from the receipt of your assessment.
Learn the language used for real and personal property tax appeals and research the intricacies of the process. While it may seem complicated, taking the time to understand what the appeal process requires could save your company thousands of dollars. Also, keep in mind that you must still pay your taxes, or you forfeit the right to appeal – so be sure make payment a priority.
2. Understand The Valuation Criteria
Gauging the fairness of your commercial property taxes requires a solid understanding of your property’s true value. Companies preparing to appeal their commercial property taxes should know the valuation criteria used to gauge the value of their property.
When commercial properties are assessed, they are typically done so using the following approaches:
- Income approach: This is one of the most commonly used evaluation approaches. The income approach estimates the tax value of the property based on the income that’s produced by evaluating the relationship between net income and value through capitalization. This can be done based on actual income and expenses or market assumptions. When properly developed and adjusted, this approach is a reliable indicator of market value.
- Cost approach: This approach estimates the cost new of the same property with the proper application of all forms of depreciation accounted for plus the land value. The underlying premise is that no one would pay in excess of the depreciated cost new of an existing building.
- Sales Comparison approach: In this model, the value of a property is based on the price per unit that similar properties recently sold for as it clearly identifies what market participants will pay for or sell a property for in an open market.
Knowing which of these appraisal methodologies was used on your property is a key step in building your appeal case. To determine how your property was appraised, request this information from the assessor’s office.
3. Begin Preparing Your Case Immediately And Thoroughly
When it comes to commercial property tax appeals, there’s no such thing as over-preparing for your case. In fact, it’s essential to get started as soon as possible. You bear the burden of proof for your property’s actual value, so your appeal should be well supported and well documented. Collect any and all data you’ll need, and begin building a thorough case.
Make time to prepare for the hearing itself. Property tax hearings vary in protocol by jurisdiction, but the basics are about the same. You’ll present your case in front of the tax appeal board, ranging from three to eight officials. Keep the facts simple and concise. You’ll only have about 15 to 30 minutes to make your appeal. Highlight the main points and reinforce them as much as possible. Bring pictures of your property or maps if it will reinforce your case. Partner with professionals who have experience and expertise in commercial property tax management to maximize your chance for victory.
Appealing your property taxes is a complex process, but you don’t have to go through it alone. One of the smartest decisions you could make to garner a successful appeal is partnering with a commercial property tax expert who can guide you through the steps. They have vast knowledge to apply to the complexities of the appeal process and can ease your burden of building an effective case.
Connect with our property tax experts to learn more about appealing your commercial property taxes. Schedule your free, no-obligation consultation today.