Tax Grievance - How do you go about successfully lowering your property taxes?
My investors asked me a question concerning tax grievance and I wanted to give them a good answer. Anyone have experience?
[{"id": "hswhybs", "text": "My dude, post the question. \n\nOtherwise you\u2019ll need a local consultant or tax attorney.", "replies": [], "depth": 1}, {"id": "hswmgrk", "text": "Easiest way is with an arm\u2019s-length sale lower than your assessed market value. \n\nAbsent that, a credible ad valorem appraisal with at lease the sales &amp; income approaches to value (assuming this is a typical CRE property). \n\nAnything short of those two is tricky because then you\u2019re acting as an advocate and not presenting independent valuation evidence. \n\nIf you tell me the info on the property I can give\nYou a quick back of the envelope. \n\nI adjudicate property tax assessment appeals for a living", "replies": [{"id": "hsws4b7", "text": "Second. Certified general appraisal, and our firm does a bunch of these around the Midwest each year.", "replies": [{"id": "hswsuth", "text": "I\u2019ve probably made decisions based on the evidence in your report. \n\nMade As Instructed, as they say", "replies": [], "depth": 3}], "depth": 2}, {"id": "hswtd94", "text": "It was the theory that interested them the most. By selling the property for less than assessed value, which doesn\u2019t happen in this market unless there is distress, decreases your property taxes on a comparable basis with similar, nearby, properties?", "replies": [{"id": "hswtxf3", "text": "If it\u2019s investment-grade then often times there\u2019s no credible way to lower the assessed FMV - which is almost always lower than what the assets trade at.", "replies": [], "depth": 3}], "depth": 2}, {"id": "hswx6gy", "text": "Arms-length sale? How's about selling it from one of your LLC's to another of your LLC's?", "replies": [{"id": "hswxrkd", "text": "Not only would you lose the appeal for deliberate deception, but any future appeals/properties would be highly scrutinized", "replies": [], "depth": 3}, {"id": "hsx5jkk", "text": "Youd have to pay transfer taxes and commit fraud by stating it was an arms length sale", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hswodir", "text": "I put together a 73 page treatise, *proving* the value (in 2013...before things heated back up), using data from the counties own sources; previous sales, lease rates, etc.  Took me 3 weeks to prepare.  It was honestly very persuasive.\n\nGot noped.\n\nReason:  \"Because\".", "replies": [{"id": "ht00daf", "text": "\u201cBecause\u201d they wanted more tax dollars to spend is what they were really saying\u2026", "replies": [{"id": "ht0zwrm", "text": "Yep", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hsxh2bg", "text": "In Oregon, each county has their own appeals process. This may be the case as well where you are. Familiarize yourself with the process, talk to other investors who have been through the process, and that will tell you most of what you need to know, and whether the juice is worth the squeeze. If it is, get a consultant who specializes in the property tax appeals.", "replies": [{"id": "hsxz7bh", "text": "Yes, I understand that speaking with a professional is always the best option but has anyone in this group actually tried and succeeded against Uncle Sam?", "replies": [{"id": "hsy45r6", "text": "Yes, investors I work with have and were successful in multiple property tax appeals. During the economic downturn one particular investor appealed for every single parcel of development land he owned and was successful. This prompted a related partnership to also pursuit a reduction in property taxes for a development in process because the projected rents were no longer viable due to the recession. The county agreed on a revised millage rate that would be re-examined at lease up. This allowed the developer to have more flexibility in their target for a modified gross lease rate and attain 80% occupancy despite the economic downturn when the market average for industrial vacancy rates were much higher.\n\n\nI'd suggest you not color your view of all government taxing as \"Uncle Sam\" because your local county official is not in a position with the state or federal government. Your relationship with your local official can be as difficult or friendly as you make it. In my state, the assessor is an elected position, which always means political relationship can sometimes be at play in decision making.", "replies": [], "depth": 3}, {"id": "ht00t3o", "text": "Yes, it\u2019s practically a cottage industry in IL. I appeal all my properties during each assessment cycle and frequently have the taxes lowered. Using an attorney who specializes in appeals is the way.", "replies": [{"id": "ht2c8fg", "text": "It seems like the government body responsible for taxes in your area are familiar to you?", "replies": [{"id": "ht2l30l", "text": "Not really. I outsource to an attorney who specializes in reducing property taxes. I pay them a contingent fee based on savings.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]