If you own any commercial real estate, you owe it to yourself to take a close look at your tax bill. It is extremely important to review a property’s assessment before and after purchase to ensure it is accurate and the lowest amount possible. If any economic circumstances occur, you may be in for a reduction!
Overvaluation and errors occur often and you have nothing to lose if you appeal to the county. If you do appeal, the assessment will either stay the same or it will be lowered. It cannot be increased and you will not be fined. Depending on what county your property is in, it will be reassessed typically every two to five years. However, you can make an argument for lowering the assessment at any time if your property’s status changes (i.e. zoning changes, structural changes, changes of ownership, etc…)
1. Great Tips
Throughout the year, take note if there is a change in the condition of your commercial property at any point. Also, make sure to review this at the end of the year, when it comes time to pay your tax bill. The factors you should be looking for include (but are not limited to):
- Loss of a tenant
- Renewal or renegotiation of a lease, resulting in a loss of revenue
- Vacancy of any portion of your property
- Significant improvements or repairs
- Physical damage to a property including vandalism
- Environmental issues
- Overall decline in market value that warrants a lower appraised value
If any of these changes occur, you are not guaranteed a change in your property’s assessment, but it may warrant an assessment review upon appeal.
2. Foreclosure
A foreclosure or deed in lieu of foreclosure (when property is sold back to the lender to avoid foreclosure) can also provide enough evidence that the property’s value has deteriorated. Also, purchasing a property at less than the value it is already assessed can provide evidence that the property was overvalued when it was purchased. This information can be used to lower the assessment value right away and you don’t have to wait until the property is due to be reassessed.
3. What Now?
If you own any commercial properties, the sooner you can evaluate them, the better. If you have a property that you believe is overvalued, it is in your best interest to move quickly. The county will not refund money back to you for an overvaluation, even if it seems an obvious error on their part. If you feel you have a strong enough case, you should consider hiring an attorney who specializes in real estate tax assessment appeals. An attorney can expedite the process and make a stronger argument with the county.
The main thing to remember is that a reduction in taxes due to assessment is not an automatic process. The county leaves it up to the owner to find these corrections and without your input, they have no idea that condition of your property has changed. Also, if your property is now more valuable, there is no point in bringing this to the counties attention, they will figure it out… eventually.
Kelsey Jordan looks to websites like Iowa City Real Estate for great advice on how to save on real estate.