If your commercial property tax assessment seems to increase year after year, or if your property tax bill is eating into your budget, it is time to consider filing an appeal.
Appealing property taxes is a complicated process that involves a wealth of expertise, data, and documentation. Given that most banks and real estate owners continually explore ways to lower expenses, this is a money-saving opportunity worth exploring.
So what’s the secret to a successful appeal? Use a third party service.
Third party services are well-versed in the complexities of appeals, and often have teams of experts on hand to prepare professional, detailed cases that can reduce assessments. Going this route is virtually a no-risk way to maximize your chance for victory.
Why Banks Should Appeal Property Taxes
It’s a common misconception that Bank branch property taxes are a fixed cost or always assessed correctly. If your Bank has never appealed your branch property taxes, chances are you’re overpaying. In reality, many banks can be more proactive in managing their costs, and a tax appeal on branches or OREO is a great starting point.
In some cases, there might be an error on your tax assessment. Bank branches are also notoriously overassessed due to the fact that some municipalities suggest there are multiple uses for branches. Occasionally, there might be specific laws in place that could potentially raise or lower your taxes. For example, in some parts of Maine, tapping into solar power could raise your taxes, while other states are considering creating loopholes for that same strategy.
Steps in the Tax Appeal Process
Each tax authority is charged with the responsibility to determine property values for the properties within their jurisdiction for ad valorem taxation. The property tax bill is created thereafter by multiplying the property’s assessed value by the local tax rate.
Upon notification of the property valuation set for the tax year, a property owner should review the value estimate for property tax purposes and consider the following: Is the value reasonable? How was the value determined? Which approach to value or methodology did the jurisdiction use? Is any personal property included in the real property value that should be separated? Does the value accurately reflect the correct inventory and attributes of the property? Has appropriate depreciation been considered? Was there a significant increase in value? If so, why? Are exemptions correctly applied if applicable (i.e., historical, agricultural, etc.)?
The opportunity to challenge the market value of the jurisdiction is typically open for a short period of time; often only 15 – 30 days with deadlines varying with each county, municipality or state. Having supportable evidence available to file a protest is key for successful results in the appeal process.
HERE’S WHAT TO EXPECT DURING THE PROPERTY TAX APPEAL PROCESS.
- Review your annual notice of assessment. Pay close attention to the year-to-year changes in your property’s appraised value. If the percent increase seems high over a short period of time, that could be an indication that something is off.
- Evaluate comparables in the area. You can look these up online or visit the Board of Tax Assessors to see what’s on file. Talk with local brokers or appraisers in the area that may share data regarding sales, listings, or lease information.
- File your property tax appeal. You’ll most likely need to fill out a form with your Board of Tax Assessors. Many require supporting evidence at the time of appeal. Such evidence could be comparable data, recent appraisals, photos of deferred maintenance, a description about an issue with the property (i.e., zoning restrictions, ingress/egress, noise, traffic, etc.); listing or contract information, or rental/income history.
- Wait for the outcome. After your appeal is received, there’s typically a waiting period. If your appeal is approved, the tax authority will amend the value. It may or may not be the results you desire. If the appeal is denied, you can either let your appeal die or go through a more formal process of appearing before a board or filing litigation.
It’s important to note that, even if you’re appealing, you still must pay your taxes or else you forfeit the right to appeal.
Understanding Valuation and Documenting the Case
A typical mistake banks and other real estate owners make when considering a property tax appeal is not having a clear grasp on the market value of their property. It is essential to make sure that either internally or through a third party, you have individuals working on the appeal that understand the different aspects of valuation (cost approach, sales comparable approach, income capital approach).
The documentation component of an appeal is imperative to “get right.” This is where having a third-party service can really come in handy. Your outsourced experts will prepare a thorough, well-documented case that they’ll present in front of a tax appeal board that may consist of three to eight officials if analyzing information warrants an appeal to be filed. The case should focus on main points, along with any photos, supporting comparable data, maps, history of the property, contracts, or recent appraisals that support the value believed reasonable and reflective of market conditions as of the lien date.
The strength of your case will make or break your appeal, so having a solid plan is critical. Even if you’re utilizing a third-party service, consider the following points recommended by Realtor.com:
- Look up a description of your property and make sure it’s accurate. You might think you have 10,000 square feet, but in reality, you could have 9,000sf or 11,000sf.
- Look at how the county assesses property. What does it consider the assessed value to be? Become confident asking: “Is my property worth this much?”
- Look at comparable sales in the area to check if the assessor’s number is too high or just high enough.
These are all things that an appraiser, as well as your tax appeal service, can assist you with as you build your case.
Finding the Right Property Tax Appeal Service
Now that you know a bit more about the appeal process, what should your next steps be? Consider a third-party property tax service and ask for assistance if you are unsure if an appeal is needed. Use this checklist as a tool to help you decide on the right third-party service. The answers will help prioritize your immediate steps, and also help you project your to-do list for further down the road.
PROPERTY TAX APPEAL CHECKLIST
- Will appealing your property tax bill save money?
- Are you ready to act quickly?
- Do you understand the property tax appeal process?
- Do you know the value of your property?
- Do you have a well-documented case?
Now that you know what your immediate first steps should be, here’s how we can use our experience to help you.
INTRODUCING MOUNTAINSEED’S BANK BRANCH PROPERTY TAX APPEAL BUSINESS
Since its inception, MountainSeed has worked with over 600 Financial Institutions in addition to thousands of real estate owners. The Bank branch and OREO tax appeal business is a risk-free solution that helps our clients lower their expenses and increase marketability for OREO assets.
MountainSeed has a team with extensive experience in property tax appeal scenarios. The business line is led by an individual who oversaw a large metropolitan area’s tax assessment division for 30+ years. There is full-time staff located throughout the country with clients located in each state. Our operational team has a multiple asset class understanding which helps us build the correct case when going through the appeal process.
The service is no risk and does not require any upfront or fixed cost. We work on a straight contingency basis and are only paid if we save our clients money.
Property tax appeals are complicated — but they don’t have to be. Contact us today for more information on our Property Tax Appeal Service and Bank Branch Tax Appeal Business.