Avoid These Five Mistakes When You Protest Property Taxes

The National Taxpayers Union Foundation reports that 30% to 60% of taxable property in the United States is valued too high. Even so, less than 5% of taxpayers attempt to protest property taxes. Appealing your unfair commercial property values can save you thousands or more each year, but it must be done the right way. Many property owners fall victim to common errors that result in weak arguments and a lower likelihood of success.

At Lane, we aim to empower commercial property owners with the insights they need to successfully protest and further grow their businesses. Here, we’ll look at some of the most common errors associated with the appeals process — and tips for keeping your protest on the right track. Let’s get started!

Mistake #1: Forfeiting the Opportunity to Protest

Many property owners consider protesting their commercial property taxes but change their minds after looking into what the process entails. Admittedly, a protest can be intimidating and time-consuming. However, when you approach the process correctly — and with the right team by your side — you can save your business a substantial amount each year.

It’s important to remember that the mass appraisal systems many county appraisal districts (CADs) employ result in errors more often than not. This is due to the fact that they value large groups of properties all at once. Remember, no other property is exactly like yours, so there’s no such thing as an apples-to-apples comparison. Appraisal districts may not be aware of factors that affect your unique holdings, such as needed repairs, vacancy rates, market rental rates and future development potential. This is one of the many reasons we recommend protesting your commercial property taxes annually.

Take time to familiarize yourself with how such appeals work, and to understand county-specific protest processes for your area. A common misconception about protesting property taxes — and a reason many property owners choose not to fight back — is the idea that it will add to the financial burden a company already faces. But you shouldn’t have to fear high fees. Although every tax firm operates in its own way, many such as Lane work on a contingency basis. That means they won’t require payment unless they save your business money. The only exceptions are certain filing fees.

Mistake #2: Ignoring Market Value Conditions

The strongest commercial property tax protest cases are built on facts. Having an in-depth understanding of your area’s commercial real estate market and how it impacts your property values can go a long way toward fighting back against unfair valuations. If opting to appeal high property taxes yourself, researching the current market — not just in your community, but in others nearby — can help bring your argument into focus.

A good place to start is with your commercial property market value. That refers to the price you could expect your property to sell for on the open market. This value is determined by several factors:

• Location and Accessibility: Buildings located in busy areas with high visibility and easy accessibility are often higher in value.
• Physical Attributes: This includes architectural style, building size and layout, use of windows, security systems, regular upkeep and quality of construction.
• Income Potential: A building’s ability to generate income through factors such as rental and occupancy rates can increase its worth. The more net income your property generates, the higher its value.
• Changing Market Conditions: This can include factors such as interest rates, what buyers are looking for and the overall economic climate.
• Environmental Factors: Energy-efficient practices such as water conservation, waste reduction and renewable energy programs can potentially result in property tax reductions.
  

Mistake #3: Insufficient Property Data

As we’ve mentioned, the best property tax protests are driven by data. One of the most important steps in fighting high property taxes is to gather as much information as possible before a hearing. You know your commercial properties better than anyone else, and you (or the firm representing you) will need to educate the appraisal review board (ARB) about all aspects of your buildings and business.

Gather evidence that adequately illustrates your properties’ condition, use and past valuations. This detailed information helps to highlight any factors that make your properties unique — and can help strengthen your argument. Pertinent evidence includes:

• Tax Records
• Prior Appraisal Information
• Repair Estimates
• Property Surveys
• Deed Records
• Neighborhood Market Data
• Photographs Showcasing Property Conditions
• Property Damage Documentation
• Profit & Loss Statements
• Rent Rolls
  

Mistake #4: Waiting Until it’s too Late to Protest

The typical deadline for filing your protest is May 15 or 30 days after receiving an appraisal notice. If you can provide a good reason for missing the local deadline, you may be granted a late hearing. However, failure to present adequate cause could result in loss of the right to protest your property taxes that year.

If you’re handling the protest on your own, make sure to adhere to the submission dates and give yourself plenty of time to collect data. If you’ve enlisted help from a firm such as Lane, ensure they have ample time to gather information and build your case. Remember, your firm is tasked with more than mere data collection. Its work involves developing a strategy tailored to your unique properties and situation, preparing for potential counterarguments and consulting with legal experts and stakeholders. The sooner you start, the better.

Mistake #5: Protesting Property Taxes on Your Own

As a business owner, you have your hands full. Not only does a protest require extensive research, planning and strategy development, but success is contingent on adhering to strict deadlines. Factor in the occasional legislative shift, and things can become overwhelming fast. Passing protest responsibilities to a professional firm can help save you time, money and sanity.

Property tax experts have spent years studying legal strategies associated with protesting property taxes, and they deal in the work every day. At Lane, we have more than 100 years of combined experience, in addition to a network of strong relationships with real estate professionals and county representatives. Our experienced team has seen hundreds of different tax situations, and we have the time to prepare and present a strong case on your behalf.

If you have questions about any of the above, or if you’re interested in learning the best ways to position your case for success, feel free to reach out to our tax experts at any time. Our blog is also filled with useful information aimed at helping you avoid common tax protest mistakes and better understand the process. Your Lane team is here to help and ready to unburden your business.