The Time for Waiting is Over: Appeal Your Property Taxes Before It’s Too Late
For owners of commercial real estate, cash flow is important. Property owners should always be looking for opportunities to cut unnecessary costs, particularly during periods of economic uncertainty. Frequently overlooked, a real property tax appeal may present an opportunity to save a significant amount of money and may even lead to a recovery of a portion of prior taxes paid.
County assessors are often overworked, may not be using the correct methods to determine value, or may be unfamiliar with particular aspects of your property. As a result, you should look critically at the assessed value of your property and consider an appeal. In the case of higher value real estate, a successful tax appeal could result in significant tax savings and even a sizable repayment. While the outcome of any tax appeal is uncertain, the status quo is certain if you fail to file a timely appeal.
You should be aware of several important deadlines if you plan to appeal your property taxes. But, most importantly . . .
The Deadline to File and Serve a Tax Appeal is April 30 – the Year the Taxes Are Due
If you want to appeal your real property taxes due this year, you should not wait any longer. Don’t miss out on the chance to save money on property taxes by ignoring this deadline.
Filing an appeal is complicated and involves service on multiple parties. If you are considering filing a property tax appeal, you should discuss the matter with an attorney that handles property tax appeals well before the above deadline.
Owners of income-producing properties face another deadline. An owner of income-producing property must provide certain financial information by August 1 – the year the taxes are due. Courts vigorously enforce this deadline and have dismissed many property tax appeals, regardless of merit, because the owner did not meet this deadline.
For this purpose, “income-producing properties” generally include any property occupied by other parties who pay the owner something to use the space. Even if the company owning the real property has the exact same ownership of the company operating the business, the property-owning company must provide the above information by August 1. Property can be “income-producing” even if the occupant does not pay formal rent and even property that generates a net yearly loss falls within the definition of income-producing property.
You should speak to an attorney proficient with real property issues if you have questions about whether your property qualifies as “income-producing” and what information you need to provide, if any. Even if you did not an involve an attorney when filing the appeal, it is not too late to involve an attorney to analyze your potential disclosure obligations before the August 1 deadline.
Fair Market Value
Property taxes are based on the fair market value of the property as of January 2 of the assessment year. Fair market value is often defined as the price that a reasonable buyer would pay for the property in an arms’ length transaction. While sounding simple, this calculation can be complicated and is often subject to dispute, particularly if the appeal involves a large commercial income-producing property, or if the property was purchased with seller-financing.
Do not assume your county correctly determined the fair market value of your property. County assessors can, and often do, assign incorrect fair market values.
Appraisers are often invaluable experts during property tax appeals, especially if the subject property is highly valuable, commercial in nature, income-producing, or all three. However, you should avoid the temptation to hire a real estate appraiser on your own before involving legal counsel. An experienced property tax attorney can help you select an appraiser best suited for your situation, i.e. an appraiser who has experience evaluating the type of property in dispute, who responds quickly to questions and prepares high-quality written reports, and who has a good reputation and experience in dealing with taxing authorities. If you already have an appraiser in mind, your attorney can vet this person so that you can make the best possible decision when choosing an appraiser.
If you hire your own appraiser before involving legal counsel, however, you may receive a report from your appraiser that either lacks the requisite analysis or arrives at a conclusion at odds with your petition. Further, because this appraiser was not working in conjunction with your attorney, your county is more likely to obtain access to any communications between you and this appraiser, as well as that appraiser’s report. Unwittingly, your appraiser may provide your county taxing authorities with the best evidence against you.
Keep Paying Your Taxes
No matter how unfair it may seem, you must continue paying your established property taxes until you prevail in your appeal or obtain a settlement. If you miss a property tax payment by even one day, your tax appeal may be dismissed. If you prevail in your appeal or obtain a favorable settlement, the county may repay a portion of the overpaid taxes and may even include some interest.
Combining Multiple Appeals
It may take a year or more for your appeal to reach the Tax Court from the date of filing. As a result, your petition for one tax year may still be pending when it comes time to file a petition for the next tax year. Minnesota tax courts frequently combine these appeals and it is not uncommon for a contested matter to involve three or more tax years. Though this obviously delays resolution, an experienced tax appeal attorney can handle multiple petitions efficiently and in a way that provides maximum value to the client.
If you want to discuss appealing your real property taxes, please give us a call. You should not wait to start the process. To increase the odds of a successful petition, we must gather information and analyze your position in the context of the current state of the law. The April 30 deadline is approaching fast. Don’t let another day pass without at least considering an appeal of your real property taxes.