Real Estate Tax Appeals During the Pandemic – 10 Key Takeaways

March 10, 2021Alerts

As the COVID-19 pandemic continues to impact the commercial real estate market, property owners will be focusing on ways to reduce operating expenses, including real estate taxes.

In our recent CLE webinar, we offered a broad overview of the property tax system across all 50 states, and the process for seeking property tax reductions for clients. Topics included the property tax system in general, the process for assessing property taxes, the tax appeal process, valuation methods and the current state of the market.

Below are 10 takeaways that summarize some of the practical guidance we provided. You can also view the webinar

10 Key Takeaways:

1.

COVID has adversely impacted property values significantly nationwide, with Moody’s reporting a 7.2% drop in commercial values nationwide since pre-COVID.

2.

Although a property tax appeal can be based on a number of claims, such as tax classification or exemption, the primary claim is that the equalized property assessment exceeds the fair market value of the property, and therefore, the resulting taxes are too high.

3.

Income-producing commercial properties are particularly impacted, such as retail, office and hospitality, but others are impacted as well, including multi-family, health services and industrial.

4.

Now is the time to review a property’s assessment to determine if it is a good case for an appeal.

5.

Deadlines vary by state and each state has its own procedures that must be followed. But it is never too early for an attorney to review a property tax assessment.

6.

While each state has its own specific tax appeal process, most allow for an informal process of negotiating with the assessor early, followed by a formal process of county board review and/or state tax court.

7.

There are three primary ways to value property – the COST approach, the COMPARABLE SALES approach and the INCOME approach. 

8.

The time to review tax impacts is at the time of a transactions, such as sales and purchases, foreclosure or other events, when the current value may be derived, such as appraisals for refinancing or estate purposes.

9.

Those involved in real estate transactions – especially sales and leases – should always make sure to address each party’s rights to contest the property value and receive any refunds for prior appeals.

10.

Practice pointer: Attorneys who represent trustees, lenders, developers, receivers and others should consider property tax review as part of their advice to their clients.


For more information about the topics discussed in this alert, please contact David B. Galle at [email protected] or 612.607.7572; Mary T. Nicolau at [email protected] or 312.517.9208; or Alexander M. Wixted at [email protected] or 609.895.6730; or any member of our Real Estate Practice Group.