commercial property tax

Comprehensive Guide To Commercial Real Estate Property Tax Appeal

Gerhart Van Note / Blog, Commercial Property Tax

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:

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.
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.
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.
Condition: The current state of the property is crucial; well-maintained or recently renovated properties are likely to be assessed at a higher value.
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:

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.
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.
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.
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.
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.

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Evaluating Commercial Property Tax Firms: What Matters Most?

Bryan Hileman / Blog, Commercial Property Tax

Commercial property taxation is like a relationship — it’s complicated! Property tax professionals face the daunting challenge of managing ever-changing property tax laws and ensuring compliance while optimizing property tax savings. The risk of increased property tax liabilities and non-compliance penalties looms large, affecting your company’s financial health.

Navigating these intricate property tax waters without specialized expertise can lead to missed opportunities for property tax reduction and increased vulnerability during property tax assessments and appeals. Commercial property tax laws require understanding and foresight, which can be overwhelming even for the most experienced professionals.

Discover how to find a commercial property tax firm that helps mitigate risks and effectively manage property tax to secure your company’s financial future.

Understand the Stakes: The Crucial Role of Commercial Property Tax Decisions

According to the Tax Foundation, “Property taxes matter to businesses for several reasons. First, businesses own a significant amount of real property, and tax rates on commercial property are often higher than the rates on comparable residential property. Many states and localities also levy taxes not only on the land and buildings a business owns but also on tangible property, such as machinery, equipment, and office furniture, as well as intangible property like patents and trademarks. Across the nation, property taxes impose one of the most substantial state and local tax burdens most businesses face. In fiscal year 2020, taxes on real, personal and utility property accounted for almost 38 percent of all taxes paid by businesses to state and local governments, according to the Council on State Taxation.”

Since property tax decisions significantly influence your company’s financial health and strategic direction, complexities and challenges often arise when managing commercial property taxes.

Impact on Financial Health

Commercial property taxes represent a substantial portion of your operating expenses, so mismanagement or a lack of strategic planning in this area can lead to hefty financial burdens. Conversely, effective management and strategic reductions in property taxes can free up significant capital, improving your company’s bottom line.

Based on a World Bank Enterprise Survey, “Recent firm survey data for 147 economies show that companies consider tax rates to be among the top five constraints to their operations and tax administration to be among the top 11.”

Strategic Importance in Business

Effective property tax management goes beyond ensuring compliance — it plays a strategic role in your company’s broader financial planning. It involves understanding the opportunities to legally and ethically minimize property tax liabilities. This requires foresight, planning and a comprehensive understanding of property valuations and assessments, which are integral to making informed business decisions.

The Broader Business Implications

Property tax decisions can significantly influence other business decisions, such as property investments, expansions and daily operations. It’s a domain interconnected with various aspects of your business, making it essential to manage property taxes efficiently and strategically.

Stanford Institute for Economic Policy Research reported, “Taxation also affects how entrepreneurs organize their businesses, how much to borrow and invest and where they locate the businesses they create.”

Selecting a Property Tax Partner: Assess Track Record and Expertise

In selecting the right commercial property tax firm, understanding the importance of assessing a firm’s track record and expertise is imperative. It can be helpful to evaluate years of experience, specialized knowledge and real-world case studies demonstrating the firm’s ability to handle complex property tax scenarios effectively.

Years of Experience

Experience in commercial property taxation indicates a firm’s ability to navigate complex property tax issues proficiently. Look at their past successes and challenges; this experience is critical in managing your property tax strategies and challenges.

Property Valuation Services (PVS) boasts 26 years in the business of evaluating valuation methodologies and their impact on the true market value of our clients’ property. We have a proven track record of successfully producing reductions with our effective tools, communication and techniques.

Specialized Expertise

The intricacies of commercial property tax laws require a firm that doesn’t just understand the laws but masters them. Pay close attention to a firm’s depth of knowledge in both local and national property tax laws. This isn’t just a box to check off — it’s a critical factor in ensuring that your chosen firm can effectively handle scenarios that mirror your company’s unique challenges.

PVS’s comprehensive real estate tax services include assessment-reduction services, appeals, compliance services, assessment uniformity studies, assessment and property tax bill approval, abatement and exemption research, appraisal services, property tax accrual forecasting and reporting.

Real-World Case Studies

Real-world case studies demonstrate how a firm applies its expertise in practical situations. These case studies often detail specific instances where the firm successfully navigated complex property tax situations, providing tangible outcomes like reduced property tax liabilities or successful appeals.

One of our case studies showcases how we represented a property owner’s appeal of an excessive property valuation increase on a closed and vacant store in Missouri. PVS argued that the building was vacant and unusable, with vandalism and internal structure damage, and that there was no market demand or support for the assessor’s valuation. Our appeal reduced the assessment by 50%, saving the taxpayer $89,665 in property tax dollars.

Client Testimonials and Peer Reviews

Client testimonials and peer reviews testify to the firm’s commitment to client satisfaction and ethical practice. Look for patterns in feedback that speak to the firm’s responsiveness, transparency and overall quality of service. These real-world endorsements are instrumental in painting a picture of what it’s like to work with the firm on a day-to-day basis.

Dave Courtney, Vice President-Tax, says, “Ardent Health Services has utilized Property Valuation Services (PVS) for 21 years because the work and Services are best in class. I’m not aware of any other property tax firm that has the level of industry knowledge. The tax savings generated annually by PVS would be enough on its own for our continued relationship, but PVS has become our go-to firm for property tax research, consulting and due diligence as well.”

Evaluate Approach to Client Needs

Your business is unique, and so are its challenges and opportunities. Learn how a property tax firm’s approach to client needs can determine your decision-making process.

Customization and Flexibility

A firm that excels in adapting its strategies to suit each client’s specific needs demonstrates a level of customization and flexibility essential for your business. It’s about applying property tax laws and how they are applied to align with your company’s unique circumstances, including its market position and future aspirations. The firm’s flexibility in adapting to evolving legal landscapes and fluctuating market conditions is a testament to its capability to support your business through various stages and situations.

At PVS, our valuation methods for real estate include:

Market Approach: We consider the market conditions and comparable properties to determine value.
Income Approach: We analyze the income potential of the property to assess its value.
Cost Approach: We evaluate the cost of construction and improvements to determine value.
Additional Considerations: We also take into account various other factors, such as:
- Equitability: Ensuring fair and equitable assessments.
- Building Age and Type: Considering the age and type of the building.
- Needed Improvements: Assessing the need for any improvements that may impact value.
- Vacancy: Evaluating the impact of vacancy on property value.
- All Forms of Depreciation/Obsolescence: Considering depreciation and obsolescence factors.
- Highest & Best Use of Your Property: Determining the optimal use of the property for maximum value.

Communication and Transparency

The foundation of any strong professional relationship is built on communication and transparency. Effective communication means more than just regular updates; it involves a clear, concise and jargon-free explanation of complex tax matters. It’s about ensuring that you are always in the loop and fully comprehend the strategies being implemented.

Similarly, transparency in processes and billing is paramount. You need a firm that is upfront about its methods and costs, ensuring no surprises down the line. Transparent practices don’t just facilitate smoother operations; they foster trust. This trust is instrumental in building a lasting relationship where your property tax strategies are managed successfully.

Explore Additional Services and Support

As you consider your options for a commercial property tax firm, look beyond immediate property tax concerns. Consider also the value of additional services and support they offer. These services can be crucial to your long-term property tax strategy and financial planning.

The Value of Ongoing Consultation

Ongoing consultation services can be a game-changer for your business. This forward-looking approach allows for continuous alignment of your property tax strategies with changing market conditions and regulatory landscapes. A firm that offers such consultation demonstrates a commitment to being a long-term strategic partner.

Long-Term Tax Strategy Planning

A firm that excels in this area can help you identify and capitalize on property tax-saving opportunities while maintaining compliance with complex and ever-changing property tax laws. This is vital for maintaining a competitive edge and ensuring financial stability in the long run.

Post-Appeal Support: Beyond the Verdict

Finally, consider the level of support a firm offers after resolving an appeal. Effective post-appeal support can provide insights into future property tax planning and help you understand the implications of the appeal’s outcome. This service ensures that the benefits of a successful appeal are maximized and integrated into your broader tax strategy.

Conduct a Cost-Benefit Analysis

Understanding the True Cost: Are they charging a flat rate, an hourly rate or a contingency fee based on the commercial property tax savings they achieve? Each model has implications for your business; understanding them is vital in making an informed decision.

Evaluating Potential Property Tax Savings: Consider the scale and complexity of your tax issues and how the firm’s strategies might translate into tangible savings for your company.

Avoiding Hidden Costs: These could come in various forms, such as additional charges for services or expenses related to lengthy legal processes.

Balancing Cost and Value: A firm that may charge more but offers a significantly higher potential for property tax savings and strategic benefits might be more valuable in the long run than a less expensive but less effective option.

Uphold Compliance and Ethical Standards

Selecting a commercial property tax firm goes hand-in-hand with the assurance that they strictly adhere to legal and ethical standards. This process safeguards your company’s interests and upholds its reputation.

The Imperative of Legal Compliance

The firm’s ability to navigate and adhere to the ever-changing tax laws and regulations is essential. This diligence shields your company from the pitfalls of legal entanglements and the financial penalties that can accompany them.

Ethical Practices: More Than Just Compliance

Find a partner who values transparency in every transaction, respects the confidentiality of sensitive information and communicates openly about their strategies and capabilities. This ethical stance is crucial, creating a partnership based on trust and mutual respect.

Verifying Their Commitment

Dive deep into the firm’s background, review its certifications, ask for references and scrutinize its track record for any red flags. This thorough vetting process is your due diligence, confirming that their practices align with legal requirements and the ethical standards you uphold for your business.

As an organization, PVS follows these guiding principles:

Customer Focus: We’re dedicated to being a customer-focused organization, prioritizing the needs and satisfaction of our clients.
Quality, Integrity and Ethics: We maintain a detail-oriented work environment that upholds the highest standards of quality, integrity and ethical conduct.
Respect: We treat all individuals respectfully, fostering a culture of inclusivity and appreciation for diverse perspectives.
Exceptional Communication Skills: We emphasize effective and transparent communication, ensuring clear and timely information exchange with our clients and team members.
Teamwork: We foster a collaborative and supportive work environment, recognizing the value of teamwork in achieving our goals.
Accountability: We take responsibility for our actions, delivering on our commitments and being accountable to our clients and colleagues.

Property Valuation Services – A Benchmark in Key Selection Criteria

Commercial property taxation is complicated, but Property Valuation Services (PVS) can be your partner in this journey. With a solid background in local and national tax laws, PVS commits to making a real difference in your business. Our approach is centered around you – your unique challenges and your specific goals. Every service is dedicated to understanding and meeting your needs and is communicated with clarity and empathy. At PVS, it’s about nurturing a trusting relationship built on transparency and ethical practices. Our case studies across industries prove our ability to achieve significant client results. This is evidenced by our successful navigation of property tax challenges and substantial property tax savings for clients across various property types and industries.

Reach out to us so we can provide you with a personalized experience where every aspect of your property tax management is handled with the utmost care and precision. Have your Commercial Real Estate Property Evaluated by a PVS Property Tax Expert!

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