Commercial Clients are Urged to Consider Whether a Tax Appeal Makes Sense in Today’s Troubling Real Estate Market

The 2011 Property Tax Environment is Ripe for Appeals and Represents a Real Opportunity for Significant Tax Reductions:

With measurable declines in the real estate market, evidenced by continued high vacancy and historically low rental rates, the pursuit of a real property tax appeal has never been more compelling. In fact, municipalities are again bracing themselves for what is expected to be another tsunami of tax appeal filings. Last year, unprecedented levels of appeals were filed and towns have been left scrambling since. Adjustments to assessment levels were largely in order for 2010 and will continue to be justified in the present tax year. Towns are aware that their property assessments are not in line with the current economic climate and declining property values. It is therefore expected that significant adjustments are either going to occur voluntarily, through compromise, or involuntarily, by virtue of the mandates of Tax Court judgments. Consequently, for those who take action, it is likely that a reduction in assessment and a resulting reduction in taxes will be achieved.

The only way to take advantage of the opportunity to realize significant tax savings and improve one’s bottom line is to pursue a timely filed tax appeal. The 2011 tax appeal filing deadline is April 1, 2011 so there is little time to waste.

The first step is for a property owner, or a tenant who is responsible for the payment of taxes, to review the Property Tax Assessment Notice, which will be mailed by towns to taxpayers, in the form of a postcard, in the next several weeks. This Notice identifies the property tax assessment imposed upon the property for 2011.

This assessment number can be deceptive, however, as it does not always indicate the true value of the property. Many taxpayers are falsely lulled into believing that their property assessment equals true value and is therefore correct. This error could be an expensive mistake.

Towns employ what is called an average or “equalization” ratio in order to convert the property tax assessment to true value (the so-called “equalization value”). Only by comparing the equalization value to the true value of the property can a property owner determine whether an appeal has merit. Taxpayers who take no action are thus often left paying an ever increasing tax bill.

Once the Property Tax Assessment Notice is received, a property owner should promptly schedule an appointment with an attorney to determine the merits of a possible appeal. By taking this simple but important step, a property owner can ensure that it is paying only its fair share of the municipal real property tax burden. This is where the involvement of an experienced attorney from Cole Schotz can be of tremendous help. Our experience and relationships with professional appraisers allows us to perform, at no cost to you, a preliminary analysis to determine if an appeal is warranted.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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