Property Tax Appeals – Take Charge in Lowering Your Property Taxes
Every year, the same thing happens: a building owner opens their property tax bill and discovers that their assessment has gone up or at best, remained the same as the previousyear, knowing that in today’s market their building and land isn’t worth what the county and appraiser thinks it is. In fact, sources suggest that commercial real estate values in some parts of Midwest are down by nearly 50% from their 2007 peak.
So, how do you ensure that the assessor is fairly valuing your property? Let Capital Recovery Group perform a free, no-obligation analysis of your buildings to see if you should file a petition through the Minnesota Tax Court.
Property taxes in Minnesota are based on the value of the real property. Assessors will value your commercial real estate using a combination of three methods:
- THE COST APPROACH
Estimating the depreciated cost to build the building
- THE SALES COMPARISION APPROACH
Looking at the price-per-square-foot for comparable-building sales
- THE INCOME APPROACH
Estimating how much money the real property assets of your building earn and capitalizing that stream of income into the value
Identifying the value of the real estate alone using these three methods can be difficult in many commercial properties because value also is often found in non-taxable personal property and intangible assets such as furniture and fixtures or intangible assets like chain affiliation, reputation, franchise rights, and in-place workforce depending on property type.
The Minnesota Tax Court is a specialized court established by state legislature to hear appeals relating to issues of state taxation. There are three judges on the court, each of whom is appointed by the Governor for a six-year term. This court generally follows the same rules required in other state courts—such as the rules of evidence—and the judges issue decisions consistent with generally accepted appraisal methodologies and Minnesota statutes and case law. As a result, it is widely commented that an aggrieved taxpayer is much more likely to receive relief opting to appeal property tax assessments initially to the Minnesota Tax Court.
In Minnesota, property taxes are paid in arrears, meaning that the assessor establishes your property value each year as of January 2. However, you do not pay the taxes on that assessment until May 15 and October 15 of the following year. This delay provides taxpayers with opportunities to contest their assessments.
The deadline to file an appeal of your property tax assessment with the Minnesota Tax Court is April 30 of the year in which your taxes are due. Accordingly, the deadline to appeal your 2011 taxes—based on your January 2, 2010, assessment—is April 30, 2011. Because the appeal process is a legal process, and there are backlogs in many assessors’ offices and in the court itself, it can take more than a year to complete. During the appeal pendency you must continue to pay property taxes when due. If your case results in a value reduction, either through settlement or trial, you will be entitled to a refund of the taxes you overpaid, plus interest. Given the length of appeal processes, cases are also often resolved on multiple-year basis and often include resolution of assessments relating to taxes due in current/future years.
Take Action
If you are concerned that you are being overtaxed on your commercial property, call or email Andy Meisner at Capital Recovery Group to conduct a free, no-obligation analysis of your property.
