The process of appealing commercial property taxes can be complex and involves understanding how property values are determined, as well as knowing the right steps to take when challenging those assessments. In this article, we’ll explore the appeal process, common mistakes to avoid, and how professionals like our team can help maximize your tax savings and recovery.
Defining Commercial Property Taxes
Commercial property taxes are levied based on the assessed value of real estate used for business purposes. This includes office buildings, warehouses, retail spaces, and industrial facilities. In many cases, property taxes are one of the largest operating expenses for commercial property owners. These taxes are determined by multiplying the assessed value of the property by the local tax rate. However, assessed values are not always accurate reflections of the true market value, leading to potential overpayments.
Michael’s Tip: Assessor Techniques Can Lead to Overvaluations
“Assessors use mass appraisal techniques that rely on computer models to assign values to properties. These models don’t always consider the specifics of a property, which can lead to overvalued assessments.”
The Process of Appealing Commercial Property Taxes
Appealing commercial property taxes starts with a thorough review of the assessment notice that arrives, typically once a year, depending on the state. In Missouri, for example, assessments occur every two years, but in some states like Illinois, it can happen every three or four years.
Michael’s Tip: Appeal Deadlines
“Once you receive your assessment notice, you generally have until the second Monday in July to file an appeal.”
The process typically involves the following steps:
1. Review the Assessment
Compare the assessed value with the market value of similar properties in your area. You may also want to review the method the assessor used to value your property, which can be based on three main approaches: cost, market, or income.
2. File the Appeal
Submit an official appeal to the local tax authority, often referred to as the Board of Equalization. This appeal must be filed within the deadline provided on your assessment notice.
3. Prepare Evidence
Gather data to support your appeal, such as recent sales of comparable properties, the income your property generates, or any factors that may have been overlooked in the assessment, such as building conditions or neighborhood changes. “We often gather three years of income and expense reports and rent rolls for properties like apartment complexes to justify a lower value,” Brennan notes.
4. Attend the Hearing
If your appeal is accepted, you’ll attend a hearing where you’ll present your evidence. The assessor will also present their findings, and a decision will be made.
Michaels’ Tip: Negotiation is Critical
“Negotiation plays a critical role at this stage. It’s about telling the right story with the data.”
5. Consider Further Appeals
If you’re not satisfied with the outcome, you may have the option to appeal to higher authorities, such as the state tax tribunal or even a court.
Common Mistakes in Property Tax Appeals
Many business owners make the mistake of assuming that their property taxes are non-negotiable, or they rely on their accountants to handle the appeal.
Michael’s Tip: Your CPA May Not Have the Right Knowledge
“Accountants are great at handling financials, but property tax appeals require a specialized knowledge of real estate appraisal and local tax laws…and we’ve seen cases where appeals were denied simply because they missed the deadline by minutes.”
Another common error is failing to update the property details, such as not accounting for changes in the property’s condition or use.
How The Brennan Group Can Help
Navigating the commercial property tax appeal process requires expertise, especially when dealing with complex properties. At The Brennan Group, our team of real estate tax specialists works closely with local assessors, using a combination of data analysis, appraisal techniques, and negotiation skills to secure the best possible outcome for our clients.
Our process includes:
- Detailed Property Reviews: We examine every aspect of your property, from income statements to physical conditions, to build a comprehensive case.
- Professional Representation: We handle all aspects of the appeal, from filing the paperwork to negotiating with the assessor.
- No Upfront Fees: Our fees are based on a contingency model, meaning we only get paid if we successfully reduce your property taxes.
We invest a lot of time and resources into each case because we know how much is at stake for our clients.
Commercial Property Tax Appeal & Recovery Can Create Value for Your Business
Appealing commercial property taxes can save significant money, but it’s essential to approach the process strategically. With the right preparation and professional assistance, you can ensure your property is fairly assessed, reducing your tax burden and potentially increasing the value of your property. If you think your commercial property taxes are too high, it’s worth reaching out to experts like The Brennan Group to explore your options.
For more information on how to start the appeal process and reduce your commercial property taxes, contact The Brennan Group today for a free consultation.
