Clearing up Common Commercial Real Estate Tax Misconceptions

Commercial real estate tax can be confusing. To make it less so, we decided to clear up three misconceptions that regularly pop up when talking taxes.

It doesn’t require a lawyer to file an appeal and navigate “property tax law”
Tax assessments and subsequent appeals are an exercise in developing and negotiating real estate value. Most jurisdictions do not require an attorney at ANY level of the administrative appeals process. Hire someone that understands how commercial real estate is valued. Not someone who likes to go to court.

Sometimes your property tax bill includes more than just “property tax”
Many owners fail to budget or manage the other fees that can show up on a property tax bill.  Any number of “non-ad valorem” fees can find their way onto your tax bill, and some of those extra fees can be as steep as the property tax itself. But fear not! Many of them can be appealed and reduced if you know what to look for…

Market value does not always equal assessed value
Some owners often receive an assessment and immediately compare it to their own internal valuation (e.g., a present value based on a 10-year discounted cash flow model). And oftentimes they will forgo appealing because the assessed value is less than their own valuation. Your internal valuation should not be the deciding factor as to whether or not you appeal. Assessment methodologies can and do differ in many cases, allowing for appeal opportunities despite your own projected internal valuations.