Magazine article Journal of Property Management

The Time Is Right for Reducing Your Tax Assessment

Magazine article Journal of Property Management

The Time Is Right for Reducing Your Tax Assessment

Article excerpt

The economy's slowdown has been a cause for concern by most landlords. The demise of dot com companies and the downsizing of certain retail chains have caused an increase in vacancy rates in many parts of the country. In facing these challenges, owners and managers of commercial property would be wise to evaluate their tax assessments and to consider reaching out to their local assessors in the hopes of reducing their property tax bill. If these negotiations prove unsuccessful, it would be beneficial to consider filing a formal appeal or grievance-the timing has never been better. However, to do so, it is essential to understand how the tax appeal process works.

1. Know your annual deadline. Most states have a deadline for the filing of real estate tax appeals. For example, in New Jersey, a tax appeal must be filed by April 1 of the year in question (i.e., April 1, 2002 to appeal the year 2002 assessment). Mark this date on your calendar to make certain you will have sufficient time to evaluate the merits of an appeal.

2. Be aware of the burden of proof and any special rules. Generally, the entity filing the tax appeal will have the burden of proving that the tax assessment is incorrect. In New Jersey, as in most states, the tax assessment is presumed to be correct and the appealing party has the burden of proving that the assessment is incorrect through sufficient and competent evidence that is "definite, positive and certain in quality and quantity." This high standard requires that very sound and convincing evidence is provided to obtain a reduction in the assessment. Contact your local tax board or tax court to inquire about special rules (i.e. whether you must submit proofs of value before the hearing).

3. Consider the risks. In certain states, the local tax assessor has the right to file a cross appeal to raise your assessment. The risk of a cross appeal depends on several factors, including the tenacity of the local assessor and the merits of the appeal. If there are any doubts about the value of the property, have it appraised before the appeal is filed-it is not wise to pick a fight that you never had a chance of winning.

4. Know the amount in dispute. The tax rate will generally be applied to the tax assessment to determine the tax bill. If, for example, you are in a town with a tax rate of $2.50 per $100 of value, a tax assessment of $500,000 will result in an annual tax bill of $12,500. If you believe the assessment should be $400,000, you are actually litigating over $2,500 (tax rate times reduction in assessment), not $ 100,000. …

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