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Unlocking the Secrets of Commercial Property Valuation: A Comprehensive Guide for Navigating Tax Appeals with Confidence

February 19, 2024

Unlike residential homestead properties that often have rules and limits in place, commercial property owners often find themselves without the same legal protection. And sometimes it can feel like the wild west, essentially a free-for-all for commercial and industrial property owners.

However, with the right guidance, property owners can confidently tackle obstacles, engage authorities, seek professional support, and unite with peers to fight for fair assessments.

Navigating State-Specific Challenges and Deadlines

The issue's root lies in inconsistent property assessments, which leads to frustration throughout the process.

It’s common for commercial property owners to grapple with the complexities of state-specific tax situations, and it’s not hard to see why. Some states provide protections and acknowledge the importance of gradual tax increases, while others offer limited safeguards. Some states permit multiple opportunities to challenge tax assessments while others only allow 1 opportunity. Time is of the essence, as missing a deadline typically means forfeiting the opportunity to dispute.

That’s why property owners need to hire a real estate tax expert who can streamline the process, allowing owners to navigate without the need to delve into all the laws and processes themselves.


Transforming Valuations amid Economic Changes and the Impact of COVID-19

The commercial real estate industry is undergoing major changes due to economic shifts and the COVID-19 pandemic's impact. It’s essential to understand these dynamics to accurately evaluate properties. It’s also important to stay informed because different types of properties respond differently to economic challenges and societal changes. Having a real estate tax expert on your side can make all the difference in safeguarding your investment and your company’s ability to remain profitable in the future.

Here are some recent examples we’ve seen that are impacting property owners:

  • Impact of Remote Work on Offices: The rise of remote work is causing the value of traditional office spaces to decline as businesses embrace flexible work arrangements.
  • E-commerce Boosting Industrial Properties: The e-commerce boom is driving growth in industrial warehouse properties. Investments are continuing to be made and there is a growing demand for efficient supply chains due to increased e-commerce.
  • Digital Transformation in Banking: The shift to online banking is causing traditional brick-and-mortar banks to consolidate as they adjust to new operational models. This is affecting the size of the commercial spaces that house these banks.
  • Adaptation through Office-to-Residential Conversions: Property owners are increasingly converting underutilized office spaces into residential units. They are creatively adapting to changing market demands and optimizing property values.


Understanding the Right to Appeal Property Assessments for a Fair Valuation

An appeal allows property owners to challenge unfair or inaccurate property assessments and strive for a more equitable valuation. This right is established in local tax laws and provides clear instructions, deadlines and requirements that property owners must follow.

Grounds for appeal include:

  • Mistakes in Market Value Assessments: Refers to inaccuracies in the evaluation of a property's worth, often arising from errors in assessing its current market value, which can lead to an unjust and potentially higher tax burden for the property owner.
  • Incorrect Property Classifications: Involves the misidentification or mislabeling of a property's designated category, such as residential, commercial, or industrial, resulting in an inaccurate assessment that may not align with the property's actual characteristics and use.
  • Inequitable Assessment: Indicates instances where a property's assessment deviates from the values assigned to comparable properties in the same vicinity, highlighting potential inconsistencies that, if not rectified, could lead to an inequitable distribution of property taxes based on unjustified variations in valuation. Not applicable in all states.
  • Errors: Inaccurate information can lead to excessive assessment valuations. Double assessment and taxation can occur when an assessor values the same asset twice.

The appeal process emphasizes transparency and due process, ensuring that property owners understand how their property was assessed and the opportunity to present evidence in a fair hearing.


Partner with MarksNelson and Tim Anderson for Accurate Property Assessments

Are you looking to pursue a tax appeal? The first step is to seek professional advice. At MarksNelson, we specialize in valuation and tax appeals.  The best part? We offer our services on a contingent basis, so you only pay if we succeed in reducing your tax burden.  

With MarksNelson by your side, navigating tax appeals and property valuation concerns is simple. We have the expertise to explore different options and ensure fair assessments. Plus, our knowledge in economic development can help you secure credits and incentives, which lower operating costs.


A Step-by-Step Guide to the Appeals Process

The appeals process for challenging property assessments is complex and involves several steps. It’s important to work with your MarksNelson advisor to navigate this process:

  1. Assessment Review: We begin by reviewing your property assessment. If you believe it is overvalued, we’ll consider initiating an appeal.
  2. Professional Advice: Our property tax advisors are experts on local property tax regulations. They can conduct a high-level review to determine the potential cost-benefit scenario.
  3. Compilation of Evidence: We’ll work to gather evidence supporting your appeal. This will involve analyzing comparable property sales, assessing potential rental income, and considering construction costs.
  4. Submitting the Appeal: We then file your appeal with the appropriate authorities and present evidence to overcome the burden of proof.
  5. Appeal Review: The local assessment authorities will review your appeal, considering the evidence presented. The duration of the process may vary, with higher-level appeals often taking more time.


Unlock Fair Assessments and Savings with MarksNelson

Successfully navigating commercial tax appeals requires active involvement from property owners. The key lesson is to act to ensure fair property valuations and lessen the burden of inaccurate assessments. Property owners should explore their options, understand state-specific regulations, and implement strategies to challenge valuations.

To assist you in this process, MarksNelson is here to offer our expertise in property assessment reviews and tax appeals. Consult our tax professionals, explore our success stories, and witness the impact we can have on securing fair and accurate assessments for your property. Take the first step towards a fair valuation and sustainable tax savings.

Or call me directly at 816-743-7700 to discuss or contact the MarksNelson team today.





Tim Anderson is a key member of the real estate practice area at MarksNelson, leading the real estate valuation and commercial property tax appeal specialty groups. He partners with clients to secure credits and incentives, provide economic development guidance, and advise on state and local tax... >>> READ MORE

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