Facing an Excessive Property Valuation as Tax Season Approaches? Fear Not! A Tax Appeal May Lessen Your Tax Burden

In Real Estate, Tax by Coolidge Wall

As the deadline to pay real estate taxes for the first half of 2013 rapidly approaches, property owners may suddenly question the County’s valuation of their property. Why is valuation important? Because a property’s valuation is a significant factor relative to determining the real estate taxes associated with that property. Disagree with the County’s valuation? You may wish to consider whether filing a Complaint Against the Valuation of Property (also known as a real estate tax appeal or real estate tax complaint) makes sense for you and your property.

There are several critical points to consider before filing a tax appeal. First, March 31st is the statutory deadline for filing a tax appeal. This is a hard deadline so take care not to miss it.

Second, the complainant bears the burden of proof regarding establishing a property’s fair market value. The best evidence of fair market value is an arm’s length sale. Distressed sales like foreclosures and purchases of HUD-owned properties are typically not considered arm’s length sales. Additional evidence of fair market value includes appraisals and comparable sales. Ultimately, the taxpayer will be required to present his or her case for a reduction in valuation at a hearing before the Board of Revision. Taxpayers should consider being represented by experienced counsel at this hearing to ensure it goes smoothly.

Third, if a taxpayer has not done his or her homework, a tax appeal could actually increase a property’s valuation, which in turn would increase the real estate taxes associated with that property. In addition, depending upon the size of the valuation reduction a taxpayer seeks, the local school board may decide to participate in the tax appeal. Thus, a property owner should carefully (and realistically) evaluate whether it makes sense to challenge his or her property’s valuation. A real estate attorney can help make this determination.

Finally, tax appeals are available to owners of residential, commercial, industrial, and agricultural property. The approach to challenging a property’s valuation should be tailored to the unique characteristics of that property. Has the taxpayer recently renovated the property? Has the property recently experienced fire or flood damage? For rental property, has there been a reduction in occupancy? Are there any environmental factors that impact the value of the property? These questions should be considered and addressed when preparing a tax appeal.

This summary is by no means comprehensive – there are simply too many nuances to the tax appeal process to address in one blog entry. A real estate attorney can help navigate these uncertain waters and evaluate whether it makes sense to file a tax appeal.