It’s Property Tax Time!
Hopefully everyone has successfully completed their income taxes. Now is also a good time to focus on real estate taxes as well.
Are you paying more than you should on property taxes? I’ve seen hundreds of properties substantially overvalued where the owners are paying thousands more than they should in taxes. I recently inspected a commercial property that was valued at 650,000, based on my analysis, the property was worth no more than 350,000 (this equates to almost $6,000 more in taxes the owner is paying a year)
With the huge increases in real estate values across most of the country, taxes are bound to go up. As a real estate owner, I have successfully saved myself thousands of dollars on various properties throughout the country that I’ve owned and put together a quick guide to help
- What can you do about an increase in your property taxes?
- How easy is it to appeal?
- 5 tips to help ensure a successful appeal?
One of the primary sources of revenue for many counties throughout the country is the property tax. In many cases it funds most of the county’s budget from schools to police. As a result, many counties look to maximize their revenue from property taxes. Although each state (and in some state counties) are unique, below is a generic guide to help you through this process.
What can you do about your property tax increase?
- First, you need to understand why your taxes increased. Did the actual value of your property increase or what they call “mill levy” increase? If it is a mill levy increase unfortunately there is little you can do other than to not vote (and encourage your associates) for future increases. For example my property taxes increased due to a new mill levy for a new library system in the county. The second increase comes from an actual increase in value. If your value increased see below on some steps you can take.
How easy is it to appeal?
- Appealing your property taxes is a relatively simple process (takes a few hours depending on your county) and could save you thousands of dollars. If you have basic real estate knowledge, are persistent, and can follow directions to the T, it is very likely your appeal will be successful.
5 tips for a successful appeal
- The number one piece of advice is you must follow the appeal process to the T!. For example. in some states (like Colorado), you can only use a certain range of comparables in your appeal. In Colorado properties are revalued every odd year and you must use comparables in an 18-24 month window prior. In this case in 2015 you had to use comparables up until June of 2014 and June of 2012. Each state/county is unique so you must follow the directions to the T.
- Dates are critical. Many counties provide a short window for an appeal. If you miss this date you are out of luck
- Be accurate. When using comparables make sure you have at least three to support your value (if using the sales approach, or on a commercial property your actual leases can support the income approach)
- Know your facts. When appealing it is critical that the appeal is fact based with hard sales (or income data) to back up your assertions
- Areas that are less uniform are easier to appeal. If an area is 100% uniform (think a new planned subdivision) there will be less variation in price and therefore harder to appeal. Less uniform areas are typically easier to appeal.
By following the tips above you will drastically increase your probability of a successful appeal and possibly save yourselves thousands of dollars.
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).