If you own a commercial property, you’ve likely experienced the disappointment of receiving a property tax assessment that doesn’t add up. You know what you paid for the property and the amount of work you’ve put into it, but the math just doesn’t work out. Even worse? If left ignored, an unfair valuation becomes an overinflated property tax bill.

Inaccurate assessments aren’t proof that the county appraisal district (CAD) has it out for you. Instead, they’re often the result of imperfect systems and unreported property details. Let’s take a closer look at a few likely reasons your valuation — and its resulting property tax bill — are too high, and ways you can right the situation.

Three Reasons Your Commercial Property Tax Valuations Are Incorrect

Although your commercial property is unlike any other, the issues surrounding its incorrect assessments aren’t. Here are a few common causes behind high commercial property tax valuations.

• • Imperfect Mass Appraisal Systems Group Dissimilar Properties Together: CADs assess values for all commercial properties annually. That can be a monumental task, especially for larger metropolitan areas. To streamline the process, appraisal districts use a system that evaluates a large number of similar properties at once. Your commercial property is likely being lumped in with new structures in pristine condition, as well as older buildings that require TLC. As such, calculations often result in assessed values that don’t make sense.

• • Your Property Has Suffered Damages that Haven’t Been Reported: Over time, every property experiences damage. Whether a natural disaster such as flooding has wrought havoc on your building, your structure was the victim of vandalism or simple wear and tear means your property needs some work, there’s a high probability that such flaws weren’t factored into your assessment. Although the aforementioned issues would likely impact your assessed value, remember — your property is being considered among others in near perfect shape.

• • System Flaws Fail to Recognize Information Shared in Previous Years: A frustrating, yet common, occurrence for any commercial property owner who’s successfully protested their value is the likelihood of that assessed value creeping up again the following year. This is despite the meticulously gathered documentation and carefully presented case laying out why the property was previously overvalued. This also relates back to the mass system. Until a metaphorical switch is flipped on the CAD’s end that tells the system your commercial property should be valued at less, you’ll continue to see inflated values. Flipping that switch can take years — if it happens at all.

Fighting Back with a Commercial Property Tax Appeal

Commercial property valuations directly impact your tax obligations. Challenging unfair valuations by embarking on a property tax appeal is the best way to present an accurate picture of your property while also keeping your bottom line in check. Here are some tips to help guide your protest forward.

• Be Prepared to Protest Your High Property Taxes Annually: As we’ve mentioned, incorrect assessments have a tendency to return year after year. We recommend factoring a property tax protest into your to-do list annually to address inaccuracies, present a clear overview of your property and keep property tax bill at a reasonable level.
• Arm Yourself with Information When Fighting Your Case: The most effective commercial property tax appeals are those driven by data. When building your case, gather any and all information related to the specific value and state of your properties — as well as current market conditions. Suggested evidence includes, but is not limited to, the following.
  • • Comparative Sales Data: Include information from similar properties that have recently sold in the area. Such data can serve as an effective indicator of the market’s overall health and trends.
    • Income and Expense Information: For income-generating properties, details surrounding money made from — and expenses associated with — your operations can help to illustrate a realistic value based on income potential.
    • Property Condition Documentation: Document any unique issues or maintenance costs affecting your property that could impact its valuation. If you have quotes from contractors regarding needed repairs, be sure to include those, too.

• Partner with a Professional Firm for Your Protest: It takes extensive time and research to formulate a quality case — and even longer to argue a case during hearings or arbitration and litigation proceedings. Handing the work off to a professional firm such as Lane Property Tax Advocates means entrusting your protest to a team that deals in such work each day, understands the applicable laws and regulations and has the time to give every aspect the attention it deserves. In addition, they often have relationships with the taxing professionals who have the final say on your appeal. It’s all about saving you time, money and stress while improving your chances of success.

Inaccurate commercial property valuations are frustrating, and they have the potential to impact budgets in substantial ways. By understanding the causes behind them and the best ways to fight back, commercial property owners can take meaningful steps to protect their investment.

If you have questions about any of the above, or if you’re interested in learning how Lane can help you appeal your high valuations — and lower your property tax bill in the process — feel free to reach out to our team. Our experts are on your side, here to help and ready to unburden your business.