Magazine article Journal of Property Management

Minimizing Your Property's Taxes

Magazine article Journal of Property Management

Minimizing Your Property's Taxes

Article excerpt

March may roar in like a lion, but April is the month that strikes fear into the hearts of taxpayers everywhere. By following a few techniques for lowering taxes, however, property managers can take the terror out of the tax season.

Gather information

The first step is to gather all the available third-party information about your property, such as appraisals, surveys, blueprints, and closing statements. This information will be useful in comparing the physical data at the assessor's office. If you are missing any of this information, you can replicate much of it at the county courthouse.

Second, you will need to gather information about the improvements, such as age, square footage, condition, and limiting conditions. If you have blueprints, this portion is easy. Without them, you will need to measure the building's perimeter, inspect the condition of the building, and document any limiting conditions such as non-ADA compliance.

Also gather information on the land portion, such as acreage, topography, shape of the lot, and any limiting conditions. For this portion, get a copy of the survey done at closing to document the amount of acreage. Then review the shape of the lot to see if odd-shaped or unusable portions exist. You will also need to review the topography to determine if severe slope makes part of the acreage unusable.

Next, get the tax history of the parcel. Visit the assessor's office and ask for the last few years' estimates of fair market and assessed value for comparison purposes with your own estimate of value.

While at the assessor's office, get copies of their parcel card or computer information about your property. Is the square footage correct as well as the acreage? Have they considered all the depreciating influences on the property? Is the construction quality shown appropriate?

Check for exemptions

Determine whether your property qualifies for exemptions, either statewide or at the local level. Although it is probably unlikely that your properties qualify, it is worth the investigation as an exemption could lower your taxes to zero and make the rest of the steps in this process unnecessary.

There are different types of exemptions: partial and full. They are based upon one or more of the following:

* Property location--in special taxing districts that have been set up to encourage development.

* Age--historic property.

* Use--special-use property.

* Type of owner--manufacturers bringing new jobs to the area, for example.

Determining if your property qualifies for an exemption is simple. First, call the State Revenue Department and ask about any statewide exemptions. State legislatures pass exemptions in response to lobbying efforts by affected industries or to promote particular industries or land uses. The State Revenue Department will have a list, since they are charged with administering the property tax laws statewide.

Next, check to see if the economic or industrial development authorities in your area have special districts in which your property is located. Often the industrial development authority is empowered to lease a facility tax-free for a certain time.

Due to the ownership changes that were rampant in the last half of the 1980s, some of these benefits were lost because a new owner/manager might not be aware of the law. The local assessor's office will be aware of these districts if they exist in your area.

Do not forget to check local assessors for local exemptions as well. Your local taxing district will have a list of their exemptions. Most relate to individual residences, but it pays to review the list to see if your situation qualifies (or can be made to qualify). The whole process of checking for exemptions at the state and local level should take you no more than a few hours and can pay large dividends.

You also can test the assessment's validity by applying the income method. …

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