If you’re not careful, you could be making huge mistakes in your approach to property tax management. If you’re managing your commercial property taxes alone, without expert advice, you know that it is a complex and arduous process. This complexity often deters companies from appealing their tax assessments, leaving potential savings on the table.
Find out about these common commercial property tax mistakes and learn how to avoid them.
The Most Common Commercial Property Tax Mistakes
If you’re making mistakes in handling an appeal of your property taxes, you’re not alone. Many of these missteps are common, yet also easy to avoid if you have the right information. Here are the five most common mistakes and the steps you should take to avoid them.
- Missing deadlines. The deadlines for appealing a commercial property tax assessment, which are unique to each jurisdiction, are strict and short. They usually range from a mere 15 days to 45 days, depending on where your property is located. If you miss the property tax appeal deadline, you’re out of luck. You won’t have another opportunity to appeal until the next cycle, which could be one to four years from now. During that time, you have to pay the higher taxes.
- Not following the jurisdiction’s requirements or rules. Just as jurisdictions have unique deadlines, they have specific rules and regulations for their appeal processes. This makes appeals particularly difficult for companies with multiple locations in multiple jurisdictions.
Each jurisdiction has a prescribed appeal process, and you have to follow its regulations to the letter to have a chance at completing a successful appeal. Jurisdictions operate with different levels of data sophistication, so appeals are more easily won in some jurisdictions. To give your appeal a fighting chance, you must research your jurisdiction’s requirements and rules and make sure you adhere to all of them.
- Misreporting personal property. If you’re not an expert on property taxes, you may not realize the impact that personal property has on the value of your commercial real estate. Many companies misreport the personal property housed within the walls of their commercial real estate holdings.
Because it’s difficult to keep track of all your assets and inventory, this mistake is all too common. Compliance with the personal property tax laws unique to your jurisdiction is essential in order to avoid overpayment or fines.
- Taking a reactive approach. The vast majority of commercial property owners manage their property taxes reactively. When an assessment notice arrives, many companies don’t even know what staff member to give it to, let alone how to address it. If you don’t have a strategy in place to review incoming paperwork, you could soon be facing some of the negative effects associated with property tax increases.
If you want to build a proactive property tax management strategy, start by finding out your jurisdiction’s requirements. Be prepared to make your case for a lower assessment before you ever receive an increase. It’s smart to conduct your own annual assessment of your commercial property, and note changes in the last year that would impact the property’s value.
While you don’t have control over an increase in your property assessment, you do have control over how proactively you prepare for one. Don’t make the mistake of being caught off guard by an increase. Be ready to address one if and when it comes.
- Managing property taxes without help. The most common – and most harmful – misstep that companies make is managing their property taxes alone. When you’re out of your field of expertise, you increase your risk. Fortunately, teams of experts have the industry knowledge to help you conduct successful appeals, manage all of your property tax assessments and prepare for potential increases. This is the real key to mitigating the risks involved with property tax increases.
Now that you have a better understanding of what mistakes are most common in property tax management, you have a better idea of what to avoid. Pay attention to your process and try your best to navigate through these common blunders.
Learn more about common property tax management mistakes and the steps you should take to avoid them in a free whitepaper.