It’s a risk that can’t be totally eliminated – but definitely one you should prepare for: an unexpected increase in your property taxes.
Every year, companies like yours face these assessment increases and are left to deal with a hike in taxes they can’t afford. Uncover the risks associated with increased commercial property taxes, and find out how they may be impacting your company.
Commercial Property Taxes: Five Risks Of An Unexpected Increase
When faced with an unexpected increase in property taxes, your first concern is the hit to your bottom line. There are a number of risks that follow a tax increase, and each one has a negative impact on your business:
1. Property taxes are the largest cost of occupancy, and one that is out of your control. When you’re unable to control money pouring out of your business, the organization’s future viability is a concern.
2. The financial health of your business does not determine your property tax assessment. Your property taxes are a variable cost based on the market value of real estate transactions in the local market, not your company’s financials. So, regardless of how well you’re doing, an unpredictable increase in your operating costs could be staggering.
3. When costs are unpredictable, you must deal with elevated risk and weakened cash flow. Cash is king, and your company may have to divert funds that were budgeted for other purposes in order to pay unexpected tax increases.
4. Budgeting for your company’s future is a difficult endeavor if you’re unable to forecast property tax costs.
5. This potential impact on your bottom line threatens company growth initiatives.
For CFOs, any unexpected cost could overturn the hard work you’ve done to protect your bottom line. CEOs face a different set of challenges: as the company visionaries, you’re tasked with mitigating current risk to benefit future initiatives. When resources are used to resolve huge, unexpected property tax increases, you’re forced to give up ideas and growth opportunities for your company.
There is no one industry that is most at risk when it comes to an increase in commercial property taxes. It could happen to any company, in any industry, in any state. An increase in your taxes may not come this year or next, but eventually, you’re apt to experience one. Some organizations go from having no increase in their real estate taxes to being dealt a 25% increase. Don’t wait until that day comes to scramble for a solution.
While the risk of increased property taxes is unavoidable, you do have the power to prepare for it. Building an effective commercial property tax management plan is the key to mitigating the risk of unexpected increases.
Your company doesn’t have to accept these risks or increases without question – you do have the right to appeal. Consider partnering with a commercial property tax expert for effective property tax management and appeal guidance.
Want to learn more about how to mitigate the risks of increased property taxes? Download Commercial Property Taxes, Managed: A Guide For CFOs And CEOs.