• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Market
  • Leasing
  • Education
  • Video
  • Tenants
  • Retail
  • Trends
  • Investment

CommercialWebPage

Commercial Real Estate Prescott Arizona

  • About
  • Featured
  • Management
  • Tenants
  • Documents
  • Videos
  • Contact

Challenging Property Tax Values

September 21, 2009 By Donald Teel

taxation

Posted by Donald Teel – Arizona Commercial

In today’s commercial investment environment, property taxes can be lethal. Many investors are still paying property taxes that are reflective of the market run-up of 2000-2006 and not necessarily on the current valuations of their investments.

The questions are what can you do about inflated tax valuations, where do you turn and more importantly, how can investors challenge property tax values successfully?

Property Tax Analysis. Create an analysis of the assessed value of your property for the previous five years to determine the trend line. The analysis should show the assessed values and compare those with a legitimate Broker Price Opinion (BPO) to show market value trend compared to assess valuation trend. It might look something like the following (Download the FREE sample spreadsheet here).

Assessed Value VS Market Value Sample Analysis - Sample of Presentation for Tax Challenge[/caption]

Commercial BPO. Secure a commercial property broker price opinion (BPO) for your property to help determine the market value trend line. Arizona Commercial can do this for you for a nominal fee. The report includes photos, recorded sales values, spreadsheet analysis and conclusion.

The BPO must include such detail as location within the market, property style, age, square footage, lot size, parking, vacancy/occupancy rates, number of leasable office/areas, and other issues that demonstrate the empirical value of the property.

Appraisal Approach. If the first two suggestions demonstrate that you have a potential tax overcharge, the final requirement may be to secure a full appraisal with detailed analysis of comparable properties. Appraisals are expensive and should only be used if the economics of the situation warrant such a measure. However, when push comes to shove, a certified appraisal will carry more weight than a commercial BPO.

Challenge Process and Procedure. States have specific procedures for challenging property taxes and the process must be respected in order to be successful.

The process will include forms, time frames and details that must be completed prior to consideration of a claim. Following these procedures and time limitations will be a critical factor. Most likely you will be required to pay the taxes while challenging their validity and if taxes are not paid in a timely manner, other negative consequences can occur in the form of interest and penalties and in severe cases, assessors may sell the delinquent taxes with a lien or even sell the property after a specified time.

Appealing a tax bill is not easy and may include several layers of review including a hearing for the property owner and even judicial recourse. Ask your County Assessor’s office for a copy of their appeal process.

Failure, Refusal or Inability to Pay Taxes. It is unlikely that a refusal to pay property taxes pending the outcome of a challenge will carry any weight and may further exacerbate the problem by creating a hostile situation.

Philosophical, political or principles of conscience are irrelevant to the process. However, in some cases, hardship may be considered as a factor in when and how the taxes are to be paid. Hardship exemptions are difficult when it comes to commercial property and typically are more successful when the property is a primary residence.

Generally speaking if an owner cannot pay the commercial real estate property taxes that owner should immediately communicate with the County Assessor’s office where the property is located and seek advice.

If a challenge is in order, owners may want to contact a competent lawyer with experience in real estate property tax law.

Declining Commercial Values. Most property types have declined in value and this naturally leads to an examination of all expenses related to market value and the cost of the property, including property taxes.

Declining values are now creating a backlog of challenges and yes, it can get very nasty, as some governments are deliberately protracting the challenges and the court cases to their advantage.

There is no doubt about it, however, that some owners are still paying taxes based on unsupportable valuations from previous years. Despite the declines, property taxes have continued to climb in far too many markets. As an example of the lagging, for the first time in 12 years, property taxes in some areas of Los Angeles County declined up to 15% while others increased.


Donald Teel is Senior Associate with Arizona Commercial a central and northern Arizona commercial brokerage firm. Need more information call (928) 777-8100 or, if you prefer, you may email Donald Teel

Filed Under: Education, Finance, Market Tagged With: arizona, assessed value, investors, market value, prescott, property tax, Taxes

Primary Sidebar

Search the Blog

Subscribe to CommercialWebPage

Receive CRE News to Your Inbox
Loading

The Premiere AZ CRE Blog


Welcome to CommercialWebPage.com, Arizona's premiere commercial real estate investment and property management blog. We are now in our second generation with more commentary, tips, tools and other features designed for investors, CRE brokers and property managers.
wni-skyscrapper

commercial properties northern arizona

Willow Creek Village Prescott AZ
Prescott Retail Website Prescott AZ

Featured Posts

  • Leasing
  • Investment
  • Taxes

Lease Opportunity – Historic Prescott

Drive through restaurants are in demand. Downtown drive through restaurants are in greater demand. Now, add to this fact that we have a former Jack in the Box drive through restaurant now available for lease and it’s located just three blocks from Prescott, Arizona’s historic downtown square and Whiskey Row. Everyone in Prescott, and most […]

How 2s for Investment Today

Posted by Donald Teel – Arizona Commercial Everyone, everywhere, is talking about the real estate market. Even people who do not know anything about the real estate market are talking about the real estate market. Understandably, much of the discussion remains negative. After all, some estimates tells us that the net value of all commercial […]

CRE Topic Cloud

2010 arizona arizona commercial barack obama buyer's market center cnbc commercial commercial property commercial real estate CRE road kill del webb document donald teel economy flagstaff Industrial investing Investment investor investors lease leases Leasing market marketing Medical mortgage northern arizona Office owners ppa prescott prescott arizona prescott commercial property prescott commercial real estate prescott valley Prop. Mgmt. real estate recovery Retail sedona Tenant Tenants Video

Website by e-PartnerĀ® Development · Copyright © 2021 · Donald Teel - Commercial Real Estate Brokerage & Property Management Services· Email· Terms · Login