5 property tax myths vs. facts: appealing your industrial property assessment
Industrial properties are hot and poised for continued growth in the commercial real estate industry.
The demand is fueled by two factors:
- The e-economy is leaving investors hungry for a piece of “last-mile” logistics facilities and new industry is booming.
- Owner-occupied buildings are revitalizing communities left behind by industries of the past.
As municipalities look to capitalize on this growth, what are you doing to minimize operating costs and ensure you are not paying more than your fair share of property taxes?
Value-in-use and market value are not the same. Value-in-use refers to the present value of future cash flows to a specific owner for a particular use. Whereas market value is determined by sale transactions or leasing activity. A property is only worth what the market will pay.
Additionally, a value determined for financing, or insurance purposes, can be markedly different from an assessed value for property tax purposes.
It is important to understand the valuation parameters unique to your assessment–which can often vary between markets. Also, what is or is not assessable can vary between legislative provisions.
Various approaches and considerations can be used to achieve significant value reductions.
Do your research and access detailed data that is better suited to assess your unique property. A strategically pursued case and detailed appeal submission will give you the best chance of winning an appeal.
Property taxes are not a fixed expense and assessment authorities will work with you to amend errors and revise assessed values for accuracy. This can result in a reduced overall tax burden and foster a business-friendly environment.
You may also benefit from engaging a tax consultant who has a positive existing relationship with municipal government and the assessing authority and knows the ins and outs of assessment legislation.
Property tax can be described as a manageable operating cost as opposed to a tax.
Property assessments are subjective and can fluctuate based on:
- The valuation method
- Equity and uniformity with other properties
- Special use
A proactive approach to property tax management can yield significant results and minimize the risks and potential uncertainty of an appeal hearing.
BONUS Myth: You are alone when it comes time to file an appeal.
Fact: You can do it alone, but you don’t have to!
Altus Group can provide you with the tools and expertise you need to navigate the appeal process successfully.
Tools you can use:
Changes to Alberta Assessment and Tax: Regulated Industrial Property Assessment Minister’s Guidelines
Jun 26, 2017
Five Points An Investor Should Consider When Buying Income Producing Properties
Apr 18, 2017
The price paid for most income producing properties is directly related to their current and expected income flow. Verifying the current income flow and estimating the future income flow is a time consuming but important process. Typically, for larger properties, an estimate of cash flow over a 10 year period should be conducted.
Nova Scotia Property Valuation Service Corporation Releases 2020 Preliminary Values
Oct 16, 2019
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Last updated on October 10th, 2019 at 01:37 pm