Protect yourself against unfair real-estate tax increases - On Finance

Regional governments are under pressure to raise cash to cope with budget deficits. With sales and income taxes often at relatively high levels, one place to look for more money is through property taxes.

When 70 cents of every local tax dollar are generated from real-estate, you know who's going to get targeted, said Jeff DeBoer of the Real Estate Roundtable, a Washington lobbying group. And because politicians usually are allergic to raising residential property taxes much, commercial real-estate is a tempting target. So during the next few years, there's likely to be upward pressure on commercial property taxation.

Most property owners are willing to pay their fair share, but unreasonable assessment levels are legitimate targets to resist. So how do you go about protecting against unfair real-estate tax increases, or even win a reduction from current levels?

When you get your property tax bill, check your assessment valuation level against comparable area hotels and market value, which are the usual determinants for tax valuation. What differentiators will allow you to argue that your property is unfairly taxed at higher levels than those of similar properties? What percentage of market value is used? How does the assessor's assigned valuation of your property compare with your opinion of value? Are property age and physical condition a consideration? Do they look at income and expense statements, and what deductions are allowed? Keep in mind that a professional and educated "squeaky wheel" approach to fighting real-estate tax levels should serve you well.

Make sure you know the appeals calendar, including procedures and deadlines. If you miss relevant deadlines, you'll have to wait until next year to appeal, which would be foolish. Usually, the initial deadline requires that you submit an appeal form, often together with a written explanation of why you believe your assessment is unreasonable.

Professional assistance

At this point, I urge you to hire an experienced local attorney with a specialization in local real-estate-tax appeal work and a proven history of success to process your claim. He or she will know the rationales, nuances and required support documentation to pursue the matter effectively. It might be wise to have an appraisal, so be prepared to incur that cost, if necessary. Tax certiorari lawyers get paid in one of two ways: a standard hourly rate or a percentage of the savings they obtain for you. Fees range from 25 percent to 33 percent of the dollar amount of tax savings you receive.

The assessor's office has a limited budget and often is inclined to keep its own costs down by negotiating early settlements if the equity of a taxpayer's position is apparent. This might happen at an informal meeting with the assessor. If procedures aren't in place for an informal discussion, or if that fails to produce a satisfactory result, you have the right to present your case at a formal public hearing. There also might be administrative appeal procedures to fight the appeal board's decision. Most importantly, know your rights and pursue them in a timely and professional manner.

hmm@advanstar.com

Jeff Wilder is president of Wilder Ventures LLP, a New York City-based asset management company, and an adjunct professor at New York University. He can be reached at jswilder1@aol.com.

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