Economic waters are choppy from county to county. Businesses are experiencing an increase in revenue while simultaneously having to keep a close eye on cost-saving opportunities.
If you receive an unexpected increase in commercial property taxes, you may not have the resources to maintain financial stability. Small and mid-sized businesses, especially, suffer when facing a sharp tax increase.
Fortunately, there are steps you can take to minimize your risk and to save significant money on your property taxes. Don’t wait until a staggering increase hits your desk to take these six steps to ensure you’re prepared for the unexpected.
1. Create A Strategic Plan
One of the costliest mistakes a company can make is reactively addressing an increase in property taxes. Before your properties are even appraised, it’s prudent to have a plan in place for a potential tax increase, especially as the economy changes from one day to the next.
By developing this plan, you’re in a better position to hedge unpredictability and risk. Without one, you’re left to take a reactive, tactical approach to property tax management, which severely limits your ability to successfully build a case.
2. Evaluate Your Properties Annually
Few companies take time to evaluate their properties on an annual basis – even though doing so is hugely beneficial. Particularly when operating in an uncertain economy, it’s essential to pay close attention to your property values.
To make accurate evaluations of your properties each year, be sure to:
- Check the jurisdiction’s record for errors and determine if any have occurred in your property’s evaluation.
- Conduct a thorough inspection of all your properties and look for circumstances that may have depreciated their value. Some value-decreasing circumstances include deferred maintenance, a decrease in utilization of the property, a reduction in workforce, lower production output and a number of outside factors.
- Quantify and document any changes in value. Even if property values are going up, building values can still depreciate based on industry, demand or competitive factors.
3. Identify Property Components
Quantify all components or features of all your properties, including both real estate and personal property.
When identifying these components, make certain that intangibles are not included. An intangible is any non-physical asset that your company holds. For example, an intangible for a large chain store would be its household brand name. The stores’ property taxes are not impacted by the value of the brand name. Or, for instance, when you purchase a hotel, you assume its workforce – a necessity to keep the property running – but your property taxes shouldn’t include this value.
4. Know Your Jurisdiction
Every jurisdiction has its own due dates, commercial property tax appeal protocols, forms, documents and evidence requirements. Instead of sinking time into eleventh-hour research and compliance efforts, it’s smart to be proactive about getting to know your jurisdiction.
If you’ve recently purchased a commercial property and are new to the jurisdiction, research and document the due dates, rules and requirements as soon as possible. If you’ve owned a property for an extended period of time, keep tabs on how you’ve interacted with jurisdiction officials in the past. Be aware of your appeal history and the successful cases you’ve made to ensure that you’re using consistent arguments and proven tactics.
5. Report Your Data
Once you’ve gathered all of the information you need about your properties’ annual values and the jurisdictions’ requirements for the appeal process, create a report to track it. Reports help you monitor variables and changes in property values from year to year. They also help you proactively prepare for any future appeal you may make.
To determine what data you should track and ease the burden of collecting this information on your own, consider partnering with a commercial property tax expert. You’ll benefit from their data collection standards and expertise in increasing the value of reports.
6. Prepare An Appeal Presentation
While property tax appeal forms are highly standardized and generic, the presentation at your appeal hearing is your chance to include the most compelling information about your case and the unique circumstances of your situation.
Presentations made by counties are becoming more advanced and more visual, so if you want to make a competitive case, you have to follow suit. Include as much visual data as possible, including maps, charts, photos and more. This is the most powerful information you could provide in an appeal.
Unfortunately, this effort is also very time-consuming. As with many of the other steps involved in achieving a successful appeal, partnering with a commercial property tax specialist saves valuable time and strengthens your case. An outside firm has the experience and resources to afford you the best chance of eliciting a favorable outcome.
Ultimately, being prepared for an appeal before you’re hit with an increase in commercial property taxes could save your company thousands of dollars – and in an uncertain economy, that’s money you can’t afford to lose.
Ready to adopt a more proactive, property tax-saving approach? Talk to a commercial property tax expert for free to learn more about your options.