Do You Know Your Commercial Property Value?

Posted by Anne Sheehan on Feb 9, 2015

Commercial Property Value Remember 2008? The U.S. commercial real estate market nosedived, lowering property values across the nation, one of many butterfly effects of what The Guardian called a “vicious economic hurricane;” a storm spawned by a vast and complicated financial system that permitted high risk, unregulated mortgage lending, inflated credit ratings and investment banks’ systematic abuse of the financial network.

Amid the financial downfall, what was happening with your company’s commercial property portfolio?

If you’re like most CFOs and other executives around the U.S., you might have never given it a thought. After all, what does it matter? Paying commercial property taxes is just another fixed cost of doing business, right? 

Wrong. But if you didn’t know much about the commercial real estate market while it was at its worst, why would you have any idea what’s going on with it now that the economy has improved significantly and real estate prices have started to rise?

Here’s the rub: If your county hasn’t lowered your property values since 2008, it’s a huge red flag that you’re overpaying your commercial property taxes.

Here’s why: In September 2008, global investment bank Lehman Brothers Holdings Inc. disintegrated after being seriously exposed to toxic housing assets. The downfall of Lehman led to the largest bankruptcy filing in U.S. history. Trying to get ahead of the shattered financial giant’s unloading of debt and equity, other firms started selling off their commercial mortgage-backed securities (CMBS) at heavily discounted rates. The $600 billion bankruptcy triggered a chain of events that caused significant devaluation of the commercial real estate market.

Lehman Brothers’ bankruptcy changed the commercial real estate world forever and resulted in the longest commercial real estate recession in history.

This has serious implications for your commercial property taxes, and if they haven’t been lowered since 2008, something is awry in your local assessor’s office.

Local taxing jurisdictions determine your commercial property tax valuation. Officials in these jurisdictions are legally mandated to assess property at fair market value.

There isn’t a jurisdiction in the U.S. that was insulated from the commercial real estate crash. If your commercial property taxes have not been lowered in recent years, it’s a red flag to you that someone’s not doing their job. You’re overpaying and you need to appeal.

Property taxes are the largest cost — more than 40 percent — of corporate tax liability. But with a strategic, knowledge-driven approach to your commercial property tax portfolio, you’re able to achieve real property tax savings.

Successful appeals to lower a commercial property portfolio’s valuation result in savings that average 25 percent.

These property tax savings won’t magically appear in your bank account. It takes thorough investigation, granular attention to detail, complete fluency in a complicated and deadline-based commercial property tax appeals process and an intimate understanding of local taxing jurisdictions across the country to achieve real property tax savings.

Partnering with a team of commercial property tax management experts is the quickest, easiest and safest path toward ensuring you’re only paying your fair share of commercial property taxes.

Download RPTA’s free whitepaper, “7 Signs You Might Be Overpaying Your Commercial Property Taxes" for more insights into the commercial property market and to learn how to uncover hidden property tax savings.

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Tags: commercial property taxes

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