Property tax assessments come every year. Do you know how the value of your commercial property is determined, and what that process means for your own assessment? Most property owners don’t, which leads to them paying more than their fair share in taxes.
Explore three facts about your property tax assessments that you should know before paying your tax bill.
1. Property Tax Assessments Are Complex
When most property owners receive their assessments, they look at the assessed value amount due, but rarely pay attention to the complicated details. You could spend a lot of time trying to understand what your assessment means and how it is calculated.
Every state has its own property tax laws, but it is up to each jurisdiction to implement and execute processes to comply with state law. That’s where property taxes become a challenge for owners, especially because each jurisdiction also has its own way of assessing property value. Understanding assessments is especially difficult for owners with properties in multiple jurisdictions.
For example, some states require that properties be assessed at market value, which is generally based on an analysis of sales of comparable properties, net income generated by the propertyanalysis and depreciated cost. Even when an assessment is just based on cost, jurisdictions do not always calculate depreciation correctly. calculate it differently. Some simply use the most recent latest sale price of the property without analyzing other sales in the submarket, which can leads to inaccurate market value assessments.
With variations in both rules and execution, a taxpayer cannot be certain that his or her assessment is totally accurate. For instance, many jurisdictions do not separate personal property assessments or consider building obsolescence.
Since your assessment is complex, it’s smart to research your jurisdiction and how it values property before your own property tax assessment comes in.
2. You Have Rights
One of the greatest misconceptions about commercial property tax assessments is that they represent a fixed operating cost that property owners can’t do anything about. In fact, most properties are overassessed, so property owners pay thousands of dollars more in taxes than they should. In addition, your property tax assessment could increase drastically year to year, resulting in an unpredictably variable operating cost.
While you can’t control how the jurisdiction assesses your property, you can be proactive and leverage your legal right to appeal your property tax assessment. If you present a well-thought-out argument with supporting data, you can win your appeal, potentially obtaining multi-year results, lowering your property taxes and saving thousands of dollars.
However, appealing opens up risk, as well. When you appeal, the county assessor has the right to take a second look at your assessment, and might find additional reasons to increase your assessment. If you choose to appeal your assessment, make sure you know the actual value of your property and prepare an airtight case defending your determination of that value.
3. You Need A Property Tax Expert
Crafting a property tax appeal isn’t easy. Because so many details factor into your assessment, you need a thorough understanding of property taxes, including state law and the methods of valuation used. You also need the experience to find hidden savings, such as tax breaks or obsolescence, to reduce your property taxes further.
Partnering with a property tax expert is the best way to ensure a successful appeal. An expert has the skills and experience to build an appeal that uncovers savings, and he or she has access to information that could support your claim for lower taxes.
If you’ve received a property tax assessment, your first call should be to a property tax expert. While you may understand what the assessment is and what it means, you’ll have a better chance of successfully appealing an erroneous assessment if you have a team of experts on your side.
Learn more about challenging your property tax assessment in this free whitepaper.