Raymond Gray: Start That Property Tax Review Today

It may seem odd to be thinking about commercial property tax appeals in January. Yet now is the best time to begin, particularly in Texas, which has an annual reassessment cycle and where the system works quickly and rewards those who prepare early. No matter where you are, however, advance preparation will usually pay off.

First compare your 2010 value to what you think the fair market value should be. This will give you an idea of what to expect for 2011. Review appraisal district records and determine whether assessors are using the income, cost, or sales comparison approach to value.

Follow these key points to keep your review on target.

Seven Simple Steps:

  1. Know the deadlines for administrative appeals, litigation and payment of taxes.
  2. Verify that the taxing records for your property are correct (square footage, net rentable, classification, zoning, etc.)
  3. Diligently reconstruct the income and expense statement to remove non-realty income. This will insure that non-taxable intangible assets, such as business value, are not part of your taxable value.
  4. Do not assume that the purchase price is equal to property tax value, whether for a new acquisition, or when reviewing the assessor’s comparable sales.
  5. Determine whether your property is being taxed fairly in comparison to the competition. Newly purchased or recently constructed properties often are taxed at a higher value than the competition.
  6. Consider whether your annual operating statement reflects the market as of the valuation date. Most states value property as of a certain date.
  7. Consistently review the performance of your property tax consultant.

The sooner this work is completed the more options you will have available. Start now and you have the time to hire the right tax counsel — and they’ll have the time to do a great job.

Raymond Gray is a partner with the Austin, Texas, law firm of Popp, Gray & Hutcheson L.L.P., which focuses on property tax disputes and is the Texas member of the American Property Tax Counsel. He can be reached at raymond.gray@property-tax.com.