By Barry Sharpe
Convincing the county to refund a portion of your real estate tax may be a secret to most, but it doesn’t require magic. Once you find out when and how to appeal your self-storage property taxes, you may end up with hundreds or even thousands of dollars in refunds. There must be a reason why those who appeal continually do so year after year. If you’re interested in saving money on your property taxes, here’s some insight to the process and strategies that can help.
If you’re interested in filing a property tax- appeal, the first step is to find out when you can file. Each state and county may have different filing rules, and the window of time to file might only be a couple of weeks out of the year.
To determine whether you should file a property-tax appeal, it’s important to understand how the county determines the value of your self-storage facility. If your strategy is to give the appraiser a sob story about how the tax is a huge burden for you, your plea will fall on deaf ears. The amount of tax has to do with the property only, unrelated to any problems the owner may have personally.
As the property owner, you don’t have to testify as to you think the facility’s “true” market value is. On the contrary, you’re an advocate for your property, explaining the reasons it deserves a lower assessment. Keep in mind the job of the appraiser is to make sure your property is taxed correctly, and unless someone makes him aware as to why you should receive a lower valuation, it may not just happen automatically.
Estimating the value of a property isn’t an exact science. Counties frequently use a technique called “mass appraisal,” which systematically evaluates groups of properties in a short amount of time. The mass appraisal won’t consider whether your facility has a unique or special condition. It’ll be your job during the appeal to bring any unusual features to light.
Make Lemonade From Lemons
Filing a tax appeal provides you (or your tax-appeal representative) with the opportunity to reinterpret your facility by placing over it the biggest, darkest cloud you can. When it comes to contesting an assessment, this is a rare time when problems can actually be great news. Code violations, roof leaks, pending repairs, lease concessions, improvements, etc., can all be incorporated into the presentation. This is about the only time you can take advantage of your property’s failings, turning lemons to lemonade. The taste of repairs won’t be nearly as bitter upon receiving a sweet tax refund.
The really good news is you don’t actually have to make the repairs. You just explain that if you were to sell this property, a hypothetical buyer would want a price reduction based on the necessary work. Mention the problem is with the building, not the way in which it’s been maintained.
Seek the Right Support
Having a third-party’s opinion can make your request for a reduction more compelling. For example, it may be helpful to have a real estate broker prepare a letter for you use at the tax-appeal hearing. The letter can “suggest” things that will improve your property and make it more marketable such as new flooring, a new roof, paint, sealcoating, etc. These items may explain why you should be granted a downward adjustment on your tax valuation.
You may also want to hire other professionals to inspect the facility and provide their own assessment. Whoever met a roofer who didn’t find any problems with a roof? But instead of asking for a free estimate, you may want to pay for it. If the company gives you a free quote, it will want to be competitive on price to get the potential job. Instead, ask for an estimate that includes better materials, a longer warranty or quicker completion. If this adds 20 percent to the cost, it’s a great piece of information to present at the hearing.
There’s never just one argument to make at your tax hearing. Beyond the physical condition of your property, consider any “negative influences,” such as proximity to highways, churches, gas stations, power lines, schools, hospitals, etc. The point is you should be creative and let your imagination be your guide.
Photos can also help tell a story. When the appraiser’s office presents you with its comparables prior to the hearing, look them up in Google maps. You may also look at the sales brokers’ listing sheets in which they describe the properties in glowing colors. In other words, contrast your property with the ones presented by the appraiser.
As a building contractor, I like to explain the cost of construction and the cost to cure. Using construction-cost manuals can be helpful in suggesting a dollar amount to be used for an assessment reduction. Sometimes, you may want to ask a broker, contractor or architect to join you at the hearing. Even though they may not do much talking, if any, it tends to give more credibility to your arguments. In this case, the illusion is more important than the reality.
The property appraiser, with the volume of properties he has to assess, will never be able to properly investigate the condition of every property. In effect, you’re actually helping him with photographs and reports about your facility. This usually produces a big smile from everyone.
Left unchallenged, the appraiser’s perception becomes reality. That’s why it’s important to correct any misconceptions through the appeals process. Appealing property taxes isn’t a science. We don’t live in a perfect world. Take advantage of it.
Barry Sharpe is a managing member and principal at Hialeah, Fla.-based Property Tax Appeal Group LLC, where he oversees every property-tax-appeal case filed with the county's Valuation Adjustment Board on behalf of clients. Barry has done tax-assessment appeals for more than 30 years. He's also the owner of industrial and commercial properties, a real estate broker, and a licensed building contractor. To reach him, call 305.693.3500; e-mail [email protected].