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How to Challenge Your Commercial Property Tax Assessment

 

Whether you’re running a local business or renting out property, you understand just how costly commercial property taxes can be. Many individuals, whether they own residential or commercial property, simply look at their tax assessment and assume it’s indisputable. After all, everyone has to pay taxes, so it’s not foolish to assume that an assessment is the final word on the subject. Fortunately, your tax bill is the only one you get all year that is negotiable.

Why Challenge a Commercial Property Tax Assessment?

It’s common for people to believe that high property taxes are contingent on living in certain areas. This belief relies on the fact that municipalities dictate their taxes, from industrial to high-end residential property taxes, when they pass new laws. Individuals with commercial property, however, need to realize that not everyone in an area shares the tax burden fairly.

The price-related differential (PRD) in an area is a financial index that reveals whether appraisals are progressive or regressive. Based on property assessments, you could be shouldering an unfair tax burden relative to other taxpayers in the area. Progressive appraisals mean that high-value properties are being overvalued when appraised.

If this is the case, it means you’re paying far more in taxes than you should be. Regardless of the use of your commercial property, this is cutting into your bottom line.

When to Challenge Commercial Property Taxes

The question of when to challenge commercial property taxes is a complex one. The fact is that some people are going to pay higher taxes than others, and this isn’t always a sign that they’re shouldering an unfair burden. After all, it makes sense that someone with higher-valued property would have to pay more. If you think your property was assessed unfairly, though, it may be time to ask for a reassessment.

The fact of the matter is that nearly 60 percent of properties in America are over assessed, so all other considerations aside, the likelihood that you’re paying too much in commercial property taxes is already high. You can figure out whether your property and others like it are over assessed through complicated measures such as the PRD and coefficient of dispersion (COD), but there are much easier ways to go about this.

How to Challenge Commercial Property Taxes

It’s important to note that you cannot challenge a locale’s commercial property tax rate. This is set by law, and only legislators can alter this. You can, however, challenge your property’s assessment value. One of the easiest ways to do this is by hiring an independent property appraiser. This will give you an idea of whether your property was overvalued, and you’ll also have evidence of the over assessment if it becomes necessary.

An independent appraiser is a great first step, but if you’re certain your property is overvalued, you can file a notice of protest and ask for an informal hearing. Unfortunately, these evaluations won’t necessarily be granted, and even if they are, the powers at be may decide that there’s no justification to adjust the appraisal. There is certainly a formal protest and appeals process, but at this point, it may be more beneficial to find a property tax attorney.

Commercial property taxes are a complex issue, and regardless of a person’s comprehension of mileage rates, there’s no guarantee that they fully understand the process. This leaves many business owners paying far more property taxes than they deserve, and in most cases, they don’t even realize it. If you think a challenge to your commercial property taxes is in order, get on the case quickly to avoid the deadline on filing an appeal.

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