Today, many businesses don’t think about their commercial property taxes until it’s too late – when they’re hit with a sudden, unexpected assessment increase and subsequent tax hike.
Then, they scramble to appeal, fighting tight deadlines and digging deep for required documentation.
But, you don’t have to get caught in this trap. By actively managing your property portfolio’s risk, you’re able to prepare for assessment increases well before they arrive in the mail.
In this article, you’ll learn five ways to do just that.
1) Stay Ahead Of Assessment Schedules
So, what’s the best way to avoid deadline scrambles? Know property assessment schedules ahead of time.
Call the jurisdictions associated with your properties and find out when they’re sending out assessment notices. Be sure to confirm how long you have to respond and what you’ll need to provide if you decide to appeal. To avoid risking forfeiture of your right to appeal, you must fully understand all requirements and expectations for the process. In some cases, you’re able to access this information from the Assessor’s section of the jurisdiction’s website.
Then, create an assessment calendar and establish deadlines for yourself, ensuring that you have ample time to acquire the information you need to make a strong appeal. If, for example, the assessments don’t go out for another eight months, set yourself a reminder to start gathering data a month or two ahead.
2) Arm Yourself With Data
Appealing a property assessment requires you to submit a lot of documentation. Documentation varies from state to state, but generally, you’ll be asked to provide property appraisals, recent comparable sale information and information about the use and condition of the property – to name a few.
If you’re hit with a sudden assessment increase, you might not have time to collect all the information you need to reduce your tax liability. It’s imperative that you know your real property portfolio’s true value every year. That way, you’re able to enter the appeal process confidently, with the data you need to make your case.
When determining the value of your properties, make sure you consider every applicable detail, including:
- Occupancy for every property in your portfolio, including rent rolls for investment properties
- Operating expenses
- Construction costs, including new additions
- Deferred maintenance and estimates to repair or replace
- Problems with your building, such as low ceilings, a short truck court or outdated floor plans.
You’ll also need to know your submarket intimately. If your assessors apply a blanket value across the board, you’ll want to show why that rate doesn't apply, including factors about the surrounding area that could reduce your assessed value.
3) Accrue Early, Accrue Often
Cash on hand becomes critically important following a commercial property assessment increase and resulting tax hike. In instances where the assessment increase is particularly large, a business’s tax liability may as much as double, saddling the business with a big bill that can’t be deferred.
If you suspect your property assessment might go up, it’s prudent to start accruing more now to ensure that you have enough cash on hand to pay the bill without breaking your budget.
4) Follow Protocol
This should probably go without saying, but there are two things that you absolutely must do to protect your appeal rights as a taxpayer:
- Pay your tax bill on time, even if you plan to appeal
- Follow the process to file an appeal (including deadlines)
Simply deciding that an assessed value is too high and then not paying the taxes outlined by your jurisdiction is not an option. In fact, if you fail to pay your taxes by the deadline, you forfeit your right to appeal at all. Jurisdictions typically have well-defined appeals processes that you should follow to the letter. You have nothing to gain – and a considerable amount to lose – by going off course.
In general, it’s worth your time to find out how each tax jurisdiction works. Understanding their processes helps you anticipate their needs, streamline the appeal process and, when the data adds up, get better results.
5) When In Doubt …
… consider sourcing it out. Working with an outsourced property tax management specialist is the most efficient way to collect data, manage jurisdiction deadlines and adhere to protocol year-round. A skilled service provider helps you figure out your real property value for tax purposes, advises on when to appeal an assessment and manages every aspect of the appeal process for you.
Time Is Of The Essence
If you suspect a property assessment increase is on the horizon, don’t put yourself at risk through inaction. Instead, be proactive: Start determining the true tax value of your real property, identify critical deadlines and appeal protocols, and arm yourself with the data and knowledge you need to succeed.
Learn how to determine if your properties are assessed at fair market value.
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