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Property Tax Protests for Commercial Real Estate Investors

By Trevor McAmis | May 5, 2023

Property Tax Protests for Commercial Real Estate Investors

Posted by Trevor McAmis on May 5, 2023 5:18:20 PM

Property taxes… a necessary evil of owning any real estate, and doubly so for commercial real estate investors.

This guide is all about helping you understand the importance of property tax protests and how to navigate the process like a pro.

By the end of this article, you'll have a solid grasp on why protesting your property taxes can be a game-changer for your investment portfolio and your bottom line, as well as a clear understanding of the property tax protest process.

Bare in mind, each county and each state handles the process differently. We have tried to generalize much of this information as many counties processes are very similar. But be sure after reading, if you are going to attempt to protest your taxes alone, to do some further due diligence on your specific counties process.

Understanding Property Taxes and Their Impact on Commercial Real Estate Investments

Explanation of property taxes

Property taxes are like the hydra of the real estate world - a seemingly never-ending expense that keeps coming back to bite you.

Property taxes are levies imposed by local governments on the assessed value of your real estate assets. They help fund essential public services like schools, infrastructure, and emergency services.

While they might seem like a necessary evil, they can also have a significant impact on your bottom line as a commercial real estate investor.

Factors affecting property tax valuation

You might be wondering, "How on earth do they calculate my property taxes?"

Good question!

Property tax valuations are determined by the local appraisal district, which considers factors such as the property's location, size, and use, as well as any improvements or renovations.

The district then applies a tax rate, which varies depending on the jurisdiction, to the assessed value of the property.

The result?

Your annual property tax bill.

Here is a helpful resource to learn more about property taxes.

The role of the appraisal district

The appraisal district is like the puppet master behind the property tax curtain.

They're responsible for assessing the value of all taxable properties within their jurisdiction and ensuring that property owners are paying their fair share.

But they're not infallible.

Errors and inconsistencies can occur, leading to inflated property valuations and, consequently, higher tax bills.

Property tax liability and its effect on investment returns

Property tax liability can be a double-edged sword for commercial real estate investors.

On the one hand, higher property values generally mean higher returns on your investment.

On the other hand, higher property values also mean higher property tax bills, which can eat into your profits.

But don't throw in the towel just yet!

Protesting your property taxes can help ensure you're only paying your fair share and not a penny more.

Reasons to Protest Your Commercial Property Taxes

Market value discrepancies

Imagine you're trying to sell your commercial property, and the market tells you it's worth a cool million, but the appraisal district says it's worth $1.5 million.

That discrepancy could lead to a hefty property tax bill. Protesting your property taxes based on market value discrepancies can help ensure you're not overpaying.

Unequal value compared to similar properties

Let's say you own a shopping center, and you notice that a similar property nearby has a significantly lower property tax valuation.

That's like discovering your sibling gets a bigger slice of cake at a family party. Not fair, right?

Protesting your property taxes based on unequal value compared to similar properties can help level the playing field.

Changes in property use or zoning

If your commercial property has undergone a change in use or zoning, it's essential to ensure that the appraisal district is aware of these changes.

For example, if you've converted a warehouse into a co-working space, the property's value might be affected.

Protesting your property taxes based on changes in property use or zoning can help keep your tax bill in line with the actual value of your property.

Errors in appraisal data

Nobody's perfect, and that includes the appraisal district.

Errors in appraisal data, such as incorrect square footage or property classification, can lead to inflated property tax valuations.

Protesting your property taxes based on errors in appraisal data can help ensure your tax bill accurately reflects your property's value.

The Property Tax Protest Process: A Step-by-Step Guide

Reviewing your appraisal notice and identifying issues

The first step in the property tax protest process is reviewing your appraisal notice like a hawk. Keep an eye out for any discrepancies or errors, as these can be the basis for your protest.

Deadline considerations

Time waits for no one, and that's especially true when it comes to property tax protests.

Be sure to mark your calendar with the protest deadline. Each deadline date is different depending on where your property is located. Be sure to search your counties deadline.

If you have a property in California we have an easy Property Tax Calendar here.

Missing this deadline could mean missing your chance to save on your property tax bill.

Filing a protest with the appraisal district

Ready to file your protest? Typically you have a few options:

  1. Online filing: Many appraisal districts offer online filing for property tax protests. Check your appraisal district's website for details and the online passcode found on your appraisal notice.
  2. Mailing or hand-delivering protest forms: Alternatively, you can fill out the protest form that came with your appraisal notice and either mail it or hand-deliver it to the appraisal district by the deadline.

Gathering evidence for your protest

Now it's time to build your case. Gather evidence to support your protest, such as:

  1. Sales comparables: Collect data on similar properties that have sold recently, highlighting any differences in value.
  2. Equity assessment: Analyze the valuation of comparable properties in your area to demonstrate unequal treatment.
  3. Income Approach: Create a valuation for your property based on your financials.
  4. Expert opinions and reports: Enlist the help of professionals, like appraisers or real estate agents, to provide expert opinions and reports on your property's value.

Attending informal and formal hearings

Once you've filed your protest, you'll receive a notice with the date, time, and place of your hearing.

Informal hearings are an opportunity to discuss your case with an appraisal district representative, while formal hearings take place before the Appraisal Review Board.

Be prepared to present your evidence and make a compelling argument for your case.

Appealing to the Appraisal Review Board

If you're unsatisfied with the outcome of the informal hearing or formal hearing, you can appeal to the Appraisal Review Board (ARB).

The ARB is an independent group that will hear your case and make a decision.

Be sure to provide any additional evidence or arguments that you think will help your case.

Arbitration and litigation support

If you're still not satisfied with the ARB's decision, you have the option to seek arbitration or pursue litigation.

Arbitration involves presenting your case to an independent arbitrator, who will make a binding decision. Litigation, on the other hand, involves taking your case to court.

In either case, it's essential to have a strong legal team and solid evidence to support your property tax protest.

Remember, the property tax protest process can be complex, but with the right approach and a clear understanding of the steps involved, commercial real estate investors can potentially save thousands of dollars on their property tax bills.

By actively engaging in the process and gathering strong evidence, you'll be well-equipped to fight for a fair property tax valuation.

Leveraging Professional Help: Property Tax Consultants and Services

Benefits of hiring a property tax consultant

Navigating the property tax protest process can be a daunting task, especially for busy commercial real estate investors.

That's where property tax consultants come in.

These professionals bring their expertise, knowledge, and experience to the table, helping you build a strong case and potentially save thousands of dollars on your property tax bill.

Services offered by property tax consultants

Property tax consultants provide a range of services to assist you in your property tax protest efforts, including:

  1. Market and sales analysis: A thorough analysis of comparable properties and recent sales to determine the fair market value of your property.
  2. Equity assessment program: An in-depth review of your property's valuation compared to similar properties, ensuring equal treatment by the appraisal district.
  3. Informal and formal hearing representation: Expert representation at both informal and formal hearings, presenting your case and evidence on your behalf.
  4. Arbitration services: Assistance in the arbitration process, providing guidance and support to achieve the best possible outcome.
  5. Litigation support and management: Legal expertise and support in the event your case proceeds to litigation, managing the process and advocating for your interests.

Choosing the right property tax consultant for your needs

When it comes to selecting a property tax consultant, it's essential to find a professional with a proven track record of success, experience in the commercial real estate sector, and a deep understanding of the property tax protest process.

At Paramount Property Tax Appeal we have a long track record of success and trusted by many fortune 500 companies as well as residential owners. We currently serve California, Nevada, Colorado, Texas and New Mexico.

We have expertise in a wide variety of property types. If you would like to hear more about our services simply fill out the form below:

 

Proactive Strategies for Minimizing Property Tax Liability

Regularly reviewing property tax assessments

Stay vigilant by regularly reviewing your property tax assessments, ensuring that you catch any discrepancies or errors early on.

This proactive approach will help you stay ahead of potential issues and minimize your property tax liability.

Staying informed on market trends and property values

Keep a close eye on market trends and property values in your area. Staying informed will help you identify potential discrepancies in your property's valuation and provide valuable context when discussing your case with the appraisal district or during hearings.

Managing exemptions and tax incentives

Take advantage of any available exemptions and tax incentives, such as economic development incentives or property tax abatements.

These programs can help reduce your overall property tax liability and improve your investment returns.

Collaborating with local government and appraisal districts

Establish a positive working relationship with your local government and appraisal district.

Open lines of communication can help facilitate the exchange of information and create a more collaborative environment when addressing property tax issues.

This proactive approach can lead to more accurate valuations and a smoother protest process.

By implementing these strategies and leveraging the expertise of property tax consultants, commercial real estate investors can stay ahead of the game, minimize their property tax liability, and maximize their investment returns.

Conclusion

Importance of staying proactive in managing property tax liability

As a commercial real estate investor, staying proactive in managing your property tax liability is crucial to maximizing your investment returns.

By actively participating in the property tax protest process and staying informed about market trends, you can ensure that your property is fairly assessed and taxed.

Potential long-term benefits of successful property tax protests

Successfully protesting your property taxes can lead to significant long-term benefits, including reduced property tax bills, increased cash flow, and a more attractive return on investment.

These savings can make a substantial difference in the overall financial performance of your commercial real estate investments.

Encouragement for commercial real estate investors to take advantage of the property tax protest process

Don't let property taxes eat away at your investment returns.

Embrace the property tax protest process and leverage the expertise of property tax consultants to minimize your tax liability and make the most of your commercial real estate investments.

 

Frequently Asked Questions

Q: How often should I review my property tax assessment?

A: It's a good practice to review your property tax assessment annually when you receive your appraisal notice. This allows you to catch any discrepancies or errors early on and ensures you're staying proactive in managing your property tax liability.

Q: Can I protest my property taxes if I missed the deadline?

A: Unfortunately, if you miss the deadline to file a property tax protest, you'll generally have to wait until the next year to protest. Deadlines are strictly enforced, so it's essential to be aware of key dates and file your protest on time.

Q: What if I don't agree with the Appraisal Review Board's decision?

A: If you're unsatisfied with the Appraisal Review Board's decision, you can appeal to the State Office of Administrative Hearings or pursue binding arbitration, depending on your property's value. In some cases, litigation may also be an option.

Q: How long does the property tax protest process typically take?

A: The property tax protest process can vary in length, depending on the complexity of your case and the workload of the appraisal district. Generally, the process may take a few weeks to several months, from filing the initial protest to attending hearings and receiving a final decision.

Q: Are there any costs associated with protesting my property taxes?

A: In the vast majority of counties there are no fees to file a property tax protest with the appraisal district, you may incur costs for gathering evidence, obtaining professional opinions, or hiring a property tax consultant to represent you. The potential savings from a successful protest, however, can outweigh these costs. Furthermore, there are plenty of Tax consultants that are contingency based, meaning you only are charged when and if they are successful.

Topics: Property Tax Reduction

We specialize in reducing your property tax expenses through appeals. Our services are free until we deliver a refund or tax savings – No Savings = No Fee. Committed to defending your rights, we take pride in the trust our clients place in us.

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