A Guide to Multifamily Property Tax Appeal

The multifamily housing business is rising in the U.S., Canada, and other prominent areas. According to a report in 2021, it was around 42% of the total U.S. market. 

Most Americans and Canadians now prefer to live in multifamily apartments as they are more affordable. 

With job growth and higher urban trends, investors see multifamily housing investment as highly profitable. In commercial real estate, it is the most sought-after investment sector.  

However, multifamily housing is also subjected to property tax and is a good source of revenue for the local authorities. Still, if investors or property managers find the assessment unworthy, they have the right to file an appeal against it.

According to a 2019 survey, 31.4% of housing in the U.S. was multifamily. Multifamily housing includes duplexes, apartment buildings, or any property with separate housing units. 

Usually, the tax authority or the assessor gathers data from the other housing coming under the same jurisdiction area to estimate the market value of any multi-housing property. Various other factors, including the property’s location, size, condition, construction type, and income potential are also considered. 

The multifamily property tax assessment also takes into account the net operating income and expenses, as well as the capitalization rates.  

The net operating income is calculated after deducting operating expenses from the annual revenue of the property under assessment. 

Then, the property value on which tax is imposed is calculated by dividing net operating income by the capitalization rate. 

The process is quite similar every time, but still, for many reasons, there could be mistakes in the property evaluation. And the investor or the owner is burdened with the pressure of high payable taxes.

If any multifamily property owner receives an inaccurate assessment of their property, they have the right to appeal and challenge the assessment and lower the imposed taxes on them. 

To effectively navigate the appeal process, it is always better to consult an official who is aware of the intricacies of the tax assessment process. 

Here are the essential steps involved in the multifamily property tax appeal process.

If you are unsatisfied with the assessment notice received and the tax amount is higher than worth; you can file an appeal against it. But, before that, you must ensure that you can provide all the evidence to support your claim. 

These could be the income and expense details of the property, sales details of comparable properties in the same jurisdiction area, details of the cost of repairs or improvement, and evidence of any changes in property value due to natural reasons or increased vacancy rate.

Once you have collected all the evidence, you can file the appeal. Some important things to be taken care of: 

• File the appeal by the deadline. 

• Attach all essential documents with it. 

• Fill in all the required details correctly.

In most cases, the applicant must also attend a formal hearing session in front of a hearing official.  

Prepare yourself for the hearing by reviewing your documents and assessment report. In the hearing, you need to present your point based on evidence and answer their questions for clarification.  

If you are not confident enough to attend the hearing, consider hiring a professional to strengthen your case.

With over 3,100 assessing offices, Assetsoft is an expert in commercial tax laws. We have an experienced team of financial analysts and CMIs to ensure you pay only the right amount of tax. 

Our team supports the clients from the initial phase till you receive the final decision. From filing appeals to negotiating reviews and attending hearings, we manage everything. 

You only need to submit the documents to review, and rest assured!