Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/306204
14 May | June | 2014 Commercial Investment Real Estate FINAN CIN G FO CUS Steve Miller/Corbis PAY PROPERTY TAXES PAY PROPERTY TAXES T Y PAY PROPERTY TAXES P A Y P R O P E R T Y T A X E S PAY PROPERTY TAXES Appealing Appraisals Property taxes play a big role in bottom-line decisions. e Each year, appraisal districts send out property valuations, and upon receiving a building's assessed value, owners and investors spend time on appeals to receive what they believe is a fair value. Property taxes are one of the largest li ne item expenses for a company, and the amount paid can drastically affect a company's bottom line. by Amish Gupta of owners end up missing the deadline for a variety of reasons. Fortunately, most states have a late f ling deadline, but there are some restrictions for late protests that can dif er depending on which state and county the building is located. Late protest periods can be benef cial. For instance, investors and buyers need to pay particular attention if a property is acquired af er an appeal deadline. T e owner/investor can take advantage of the late protest period to ensure their property is valued fairly. During a transaction, there is usually no benef t or incentive for the seller to lower property taxes, but buyers have two options on which to act. T e buyer can either ask the seller not to appeal or withdraw any pending appeals, or they can ask the seller to f le an appeal on their behalf. If the seller agrees not to f le an appeal or withdraws an appeal, the buyer can f le a late protest, which will give them full control over the process. However, as mentioned before, each state and county has certain late f ling provisions, and the property may not qualify for the appeal. On the f ip side, if the seller agrees to f le and executes an appeal for the buyer, a reduction is more than likely. Although, in this case, buyers need to be careful that they do not acquire the property at a higher value than what was settled with the appraisal dis- tricts as this could cause the appraisal dis- tricts to feel taken advantage of and hinder the future success of appeals. Another point to keep in mind is the intri- cacies and potential changes of the property tax code in each state. For instance, the frequency of appraisals is usually dictated by the law, and each state has its own pecu- liarities. Being familiar with the details can Appeal Tips Given the importance of a building's value and its af ect on cash f ow, there are several points to consider when it comes to property tax appeals. First, be familiar with your jurisdic- tion's calendar. Specif c deadlines are set for sending out valuation notices and for f ling appeals. Some appraisal districts have rolling appeals without a regimented date range on when valuation notices will be sent out. In contrast, for example, Texas districts send 90 percent of the notices between May and July. Of course, each year a certain percentage 1 4 - 1 5 D - F i n a n c i n g . i n d d 1 4 14-15 D-Financing.indd 14 4 / 2 9 / 1 4 2 : 4 2 P M 4/29/14 2:42 PM