Appealing your property taxes for apartment commercial owners
Below is a MRR and PLR article in category Finance -> subcategory Taxes.
How to Appeal Property Taxes for Apartment and Commercial Owners
Save 25% to 50% on Your Property Taxes by Appealing Annually
Property taxes represent a significant cost for apartment and commercial property owners. Despite the potential to manage and reduce these taxes through appeals, many owners do not do so effectively, often thinking it's an unchangeable government estimate. However, in Texas, the property tax appeal process offers owners several opportunities to appeal, potentially reducing their taxes by 25% to 50%.
Why Some Owners Don't Appeal
Many property owners either misunderstand the process or are unaware of the chance to achieve meaningful tax reductions. Some believe that if their property's market value exceeds its assessed value, appeals are futile. However, appeals based on unequal appraisal offer clear paths to reductions. Unequal appraisal occurs when properties are assessed inconsistently with their neighbors. Some owners are also hesitant to hire tax consultants, even though many work on a contingent fee basis, charging only if taxes are reduced.
Overview of the Appeal Process
Here's a simplified guide to the annual tax appeal process:
1. Request the Notice of Assessed Value: Request this annually to review your property's assessment.
2. File an Appeal: Do this by May 31st each year.
3. Prepare for the Hearing: Gather data and review records.
4. Understand Market Value vs. Unequal Appraisal: Utilize both in your appeal.
5. Set Negotiation Limits: Decide the maximum assessed value you will accept.
6. Attend Administrative Hearings: Navigate both informal and ARB hearings.
7. Consider Further Actions: Decide if binding arbitration or judicial appeals are necessary.
How to File an Appeal
Appeal by filling out the district's protest form, citing both excessive market value and unequal appraisal as reasons. It's also possible to appeal through a simple notice indicating dissatisfaction.
House Bill 201: Valuable Information
House Bill 201 allows property owners to request the information the appraisal district will use in hearings, which they must provide 14 days before the hearing. Request this information in writing after filing a protest, as it limits what the district can present at the hearing.
Preparing for the Hearing
Review the district's data on your property. For income properties, compare their income analysis to your actual statements. Also, examine comparable sales to determine your market value. If your property is new, the cost approach may be used, making unequal appraisal the better option.
Deferred Maintenance and Functional Obsolescence
Deferred maintenance items like rotten wood or roof replacements can impact your appeal. The appraisal board may consider third-party repair estimates more seriously than owner estimates. Functional obsolescence, such as outdated amenities, can also be considered.
Unequal Appraisal Analysis
Under Texas Property Tax Code section 41.43(b)(3), appeals can be based on unequal appraisal. Collect comparables and present them in a table. Adjustments may be necessary, but simply presenting comparable properties can suffice in many cases. The district's own unequal appraisal analysis might even support your reduction.
Completing Hearing Preparation
Assess your property's strengths and weaknesses and determine which appeal approach offers the best reduction chance. Check local practices regarding unequal appraisal appeals, as practices may vary.
Administrative Hearing Process
Informal Hearing
Meet with a district appraiser to discuss and negotiate. An offer may be made quickly?"accept it if favorable; otherwise, proceed to the ARB hearing.
ARB Hearing
Present your case to a panel of three impartial citizens. They will listen, question, and ultimately decide without immediate negotiation. A written decision will follow, offering a window for further appeal.
Binding Arbitration or Judicial Appeal
Since September 2005, properties valued below $1 million can opt for binding arbitration, which includes a loser-pays clause. Judicial appeals are also viable, though potentially costly, and typically require cooperation between owners and attorneys.
Conclusion
Substantial property tax reductions are achievable through annual appeals. Utilize both market value and unequal appraisal strategies, and consider all appeal avenues, from informal hearings to judicial appeals. Understanding the process makes it more straightforward and less intimidating, offering a critical path to managing costs effectively.
You can find the original non-AI version of this article here: Appealing your property taxes for apartment commercial owners.
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