August 13, 2024

Commercial real estate property taxes typically represent a business’ most significant operating expense aside from debt. Proactively managing property taxes through review and appeal is a vital strategy that can dramatically enhance your profitability and reduce operational costs. By partnering with experts in strategic commercial real estate property tax appeals and valuation services, you can safeguard your financial health, free up capital for reinvestment and secure a competitive edge in your market.

 

Discover the transformative impact effective property tax management can have on your business operations and bottom line.

 

What are the current challenges in commercial real estate?

According to reporting by CoStar News, “Office owners across the country, coping with more vacancies and lower demand that reduce building values, now face another issue: higher property tax bills.”

 

Amid fluctuating market conditions, property taxes remain a significant burden. As market demand shifts and vacancies increase, property valuations and property tax liability changes are expected. However, the timing of property reassessments, which often lag behind current market conditions, or the application of fixed property tax rate increases, can result in property owners facing tax bills that don’t accurately reflect their property’s diminished market value. This discrepancy can create a financial strain for property owners, who must manage taxes that are misaligned with the real economic value of their properties.

 

Given these challenges, it’s imperative to understand how properties are assessed. A deep dive into the assessment process not only clarifies why you might be facing high property taxes but also equips you with the crucial knowledge needed to contest them effectively.

 

Understanding the Assessment Process for Commercial Real Estate Property

Assessing commercial real estate property is crucial in determining your property tax liabilities. Here are the factors used by local authorities to establish the taxable value of a property:

 

1. Location: The geographical area where the property is situated influences its value. Properties in high-demand or economically thriving locations are generally assessed at higher values.
2. Size: The property’s overall square footage directly affects its valuation. Larger properties typically incur higher property tax assessments due to their potential for generating more revenue.
3. Age: Age can affect the assessed value of your property, with newer properties often valued higher due to greater demand by tenants fewer anticipated maintenance issues than older properties.
4. Condition: The current state of the property is crucial; well-maintained or recently renovated properties are likely to be assessed at a higher value.
5. Income Potential: The property’s ability to generate income through renting or leasing spaces is a critical determinant of its assessed value. Higher income-generating properties are usually subject to higher property taxes.

These factors play a pivotal role in determining a property’s market value. This value is determined based on current market conditions and the prices of similar properties in the area, reflecting what the property would likely sell for under normal circumstances.

 

How does Property Valuation Services (PVS) help in accurate assessment? Holding the esteemed MAI designation from the Appraisal Institute

Our team of nearly 100 dedicated professionals, led by an experienced property tax professional holding the esteemed Member of the Appraisal Institute (MAI) designation, assists in:

 

• Expert Valuation Analysis: PVS experts specialize in commercial real estate valuation services and understand the intricacies of commercial property valuations. We use advanced tools and methodologies to analyze the factors affecting the value of your property.

• Market Comparisons: To ensure fairness, we conduct thorough market studies comparing properties in the same region. This helps in arguing for a more equitable assessment by showing real-world examples.

 

• Appeal Support: This involves preparing detailed reports and presentations highlighting discrepancies in the assessment process. We have a proven track record of successfully producing reductions, serving more than 800  clients annually with nearly 40,000 property tax parcels across all 50 states.

 

• Continuous Monitoring: PVS monitors market changes and appeals assessments accordingly. This proactive approach ensures that your property’s assessed value remains aligned with its actual market value, preventing over-taxation.

By partnering with PVS, commercial property owners can have confidence that their property taxes are fair and optimized to reflect the actual value of their investment, potentially saving significant property tax dollars annually. 

 

Commercial Real Estate Property Tax Appeal

Successfully challenging an overassessment can dramatically reduce one of your most significant operating expenses. Overassessments occur when an assessor’s appraised value exceeds its actual market value, often leading to unnecessarily high property tax bills. Proactively addressing these discrepancies is where PVS excels.

 

According to Atlanta Civic Circle, “A research team at Georgia Tech’s School of Public Policy, led by assistant professor Brian An, studied Fulton County tax records from 2011 to 2022 and found that commercial property owners appealed their properties’ assessed fair market value 31,587 times over that period and were successful 62% of the time. Consequently, they were able to lower their tax bill.”

 

This significant success rate underscores the effectiveness of well-prepared appeals and highlights the potential for substantial property tax savings.

How does PVS identify and challenge overassessments?

PVS’s role as a commercial property tax specialist involves several key actions that help challenge and correct overassessed property values:

 

Detailed Property Analysis

We begin by conducting a comprehensive analysis of your property, considering all factors that impact its market value, such as location, condition, size, age and income potential. This thorough understanding helps identify discrepancies between the property’s assessed value and the current market conditions.

 

Gathering Robust Evidence

Solid evidence is crucial for a successful commercial real estate property tax appeal. We gather data, including recent sales of comparable properties, current market reports and other relevant financial information, to build a compelling case that the assessed value exceeds the fair market value.

 

Expert Testimony and Reports

PVS provides expert testimonies and detailed valuation reports during the appeal process. These reports are crucial in negotiations and hearings, offering clear, data-backed insights into why the assessment should be reduced.

 

Strategic Negotiations

With a deep understanding of property tax laws and local regulations, our team engages in strategic negotiations with property tax assessors and other relevant authorities. Our expertise and professional approach often facilitate favorable outcomes in reducing assessed values.

Case Studies of Successful Commercial Real Estate Property Tax Appeal

Partnering with PVS meant significant property tax savings for these clients:

• Corporate Office Campus in Fulton County, GA: PVS challenged the assessment of an expansive corporate office campus that had been significantly overvalued. By providing a detailed market analysis and comparing it with similar properties, PVS reduced the assessment by $25 million, resulting in property tax savings of approximately $204,918.

 

• Big Box Store in Missouri: In another instance, PVS represented a property owner who faced an excessive valuation increase on a closed and vacant big box store. PVS’s appeal process resulted in a 50% reduction in the assessed value, saving the property owner $89,665 in property tax dollars.

 

• National Hospital Operator: PVS successfully secured a $690,000 commercial real estate property tax savings for a national hospital operator by addressing the overvaluation of a vacated, functionally obsolete hospital facility. Despite local assessors initially maintaining the total value of the old facility, even after its cessation as an acute care center, PVS managed to revalue the property by quantifying its functional obsolescence. 

Compliance and Deadlines in Commercial Property Tax Management

Knowing property tax regulations is critical for commercial real estate owners to avoid penalties and potential legal consequences. Understanding and adhering to property tax deadlines is crucial in this process. We ensure our clients comply with all property tax obligations.

 

Importance of Compliance

Failure to comply with property tax deadlines and regulations can lead to severe repercussions for property owners, including hefty penalties, interest on overdue amounts and even legal actions. In some cases, non-compliance can also jeopardize the possibility of successfully appealing unfair property tax assessments. Thus, maintaining compliance is not merely about following rules — it is about protecting your investment and ensuring its profitability.

 

How PVS Provides Hassle-free Compliance

PVS offers several vital services to ensure that clients can meet their property tax obligations effectively and without hassle:

 

 

1. Deadline Tracking: Our team keeps a detailed calendar of all relevant property tax deadlines across different jurisdictions. This proactive approach ensures that no deadline is missed.
2. Documentation and Filing Assistance: We assist in preparing and filing all necessary documentation required for property tax payments and appeals. This service is crucial, as proper documentation is often extensive and must be meticulously prepared to ensure compliance.
3. Property Tax Planning and Forecasting: Beyond mere compliance, PVS helps plan for future property tax liabilities. This includes providing property tax accrual forecasting, which allows you to budget for property tax expenses effectively and avoid financial surprises at the end of the property tax period.
4. Regular Updates and Consultations: We regularly review and keep up-to-date with legislative changes and are available to discuss the changes, when necessary, with our clients. 
5. Representation in Disputes: If there are discrepancies or disputes with local property tax authorities, PVS represents and supports our clients throughout the resolution process. This representation can be critical in ensuring that rights are protected and our clients comply with legal requirements.

Ensuring Long-Term Compliance

PVS’s role extends beyond just meeting immediate deadlines. Our comprehensive approach to commercial property tax management ensures that clients are well-prepared for long-term compliance, safeguarding against risks and optimizing the financial health of their real estate investments.

 

By partnering with us, you can rest assured that your property tax compliance is in capable hands, allowing you to focus more on properties’ strategic management and growth.

Let PVS handle your commercial real estate property tax appeal.

Challenging overassessments is a strategic move that all commercial property owners should consider, especially when discrepancies in valuation are evident. With PVS’s expertise in commercial property tax appeals, property owners can ensure they are not overpaying property taxes and can optimize the financial performance of real estate investments. This proactive approach not only guards against financial inefficiencies but also enhances your property portfolio’s overall value and profitability.

 

Don’t let overvaluations of your commercial properties burden your business with excessive taxes. Contact PVS today to discover how we can help you achieve significant savings and ensure fair assessments. Maximize the potential of your commercial real estate investments with PVS as your trusted property tax specialist.