Property taxes are a significant expense for property owners, and they can often increase unexpectedly, causing financial strain. However, property tax appeals can help property owners save money by reducing their tax bills. In this article, we'll explore how property tax appeals work and how they can benefit property owners.
If you are a property owner, we are sure you have come across some hefty tax bills every year. And if you have multiple properties under you, the situation can get even worse. That is why it is crucial to take advantage of the property tax appeal system and save some money so your pockets hurt less.
But surprising facts by CBS News state that only 5% of property owners actually go through with the appeal process. But the same reports say that over 30-60% of properties are over-assessed by the government assessors for tax needs. So, why overpay when you can save money with an appeal?
What is a Property Tax Appeal?
A property owner can challenge the assessed value of their property to have their tax bill reduced by filing a property tax appeal. According to the state and jurisdiction where the property is located, an appeal must normally be made to the board of equalization or the local tax assessor's office.
How Can Property Tax Appeals Help Property Owners Save Money?
Property tax appeals can help property owners save money in several ways.
Reducing the Assessed Value of the Property
The ability to lower the property's assessed value is one of the biggest advantages of filing a property tax appeal. Property owners may save money as a result of lower property taxes. If a property is assessed at $500,000 but only has a $450,000 market value, for instance, a successful appeal could lower the assessment to $450,000 and result in cheaper property taxes.
Recovering Overpaid Property Taxes
Property owners may have overpaid their property taxes in some instances as a result of an inaccurate assessment. Property owners who file tax appeals may be able to recoup the unpaid taxes, saving them a sizable sum of money.
Avoiding Future Tax Increases
By contesting the assessment and establishing a more accurate valuation for the property, property tax appeals can also assist property owners in avoiding future tax rises. This can provide financial security for property owners by preventing unforeseen rises in property taxes.
Improving the Property's Market Value
Reducing the assessed value of the property through a successful appeal can also improve the property's market value. A lower assessed value can make the property more attractive to buyers, potentially increasing its market value and resulting in higher sales prices.
Save money over time
Over time, even a slight decrease in property taxes can produce considerable savings. The money saved on taxes might be invested in a property by the owner or used for other things.
Other ways that property tax appeals help commercial property owners
Lowering operating costs
Commercial real estate businesses have a wide range of expenses, and property taxes can be a significant portion of their overall costs. By filing a property tax appeal, a commercial real estate business may be able to lower its property tax bill and reduce its overall operating costs.
Increasing net operating income
Net operational income (NOI), which is the sum of money earned by the property after all operational expenses, especially property taxes, are subtracted, can be increased by property tax appeals that lead to a lower tax bill. A property's worth and profit potential can both be raised by a higher NOI.
Staying competitive
Property taxes can be a significant factor in the overall cost of owning and operating commercial real estate. By filing a property tax appeal and lowering their tax bill, a commercial real estate business can stay competitive in the marketplace by offering lower costs to potential tenants or buyers.
Improving marketability
A property may become more appealing to potential tenants or buyers if a property tax appeal is successful and lowers taxes and improves NOI. This could make it easier for the commercial real estate industry to sell its properties and possibly bring in greater rents or sale prices.
Protecting assets
Commercial real estate companies can safeguard their assets and make sure they aren't paying more in property taxes by submitting a property tax appeal. They can continue to make investments in their properties and preserve their financial security as a result.
Improved cash flow
Reduced property taxes result in better cash flow for owners of commercial real estate, who can use the savings to upgrade their assets or grow their companies. This will help make your financials better. Reports say that without this cash flow, more than 82% of businesses fail when they succumb to the cash flow pressure.
Competitive advantage
Reduced property taxes can also give owners of commercial properties a competitive edge over other properties in the same neighborhood because they will be able to charge their tenants lesser rent or other expenses.
Fair assessment
Property tax appeals can assist in preventing overassessment and undue taxation by ensuring that commercial properties are valued fairly and accurately.
Greater transparency
Due to owners' ability to check the accuracy and timeliness of the data used to estimate their properties' valuations, property tax appeals can help promote openness in the assessment process.
Expert representation
Commercial property owners can benefit from the expertise of property tax appeal professionals, who can help them navigate the complex appeals process and maximize their savings.
Improved relations
A successful property tax appeal can also improve relations between commercial property owners and local tax authorities, as it demonstrates that owners are invested in the local community and interested in working together to find mutually beneficial solutions.
Do You Need a Property Tax Appeal?
Property owners wishing to reduce their property taxes may find that property tax appeals are a useful tool. Property tax appeals can assist property owners in achieving financial stability and peace of mind by lowering the assessed value of the property, recovering overpaid taxes, preventing subsequent tax rises, and increasing the property's market value.
Consider filing a property tax appeal if you think your property has been overvalued in order to lower your tax burden and save money. If you are looking for assistance during this property tax assessment and appeal process, you are in the right place. Book a free consultation call with our team to know how we can help.