Property taxes are one of the largest operating costs for commercial real estate of all types. Nebraska’s state senators cannot seem to find a compromise to lower the property tax rate, however, there are steps you can take at the county level to ensure you are not paying higher taxes than you should be on your properties.
The process starts at your county assessor’s office. It is important to periodically review the assessor’s valuation of your property to make sure it reflects the property’s accurate and current condition. If your property has undergone changes (including physical changes, functional obsolescence, rental incomes or other factors) that may have reduced your value below the current assessed value, then it may make sense to pursue a lower valuation.
Next, research the laws, procedures and deadlines for protesting property valuations in the county in which the property is located. In Douglas and Sarpy Counties in Nebraska, you have the opportunity at any time throughout the year to discuss your valuation with the county assessor’s office. Valuations are preliminarily set as of December 31 of each year and notices of changes in valuation are usually mailed out in January. You can call to discuss a re-valuation with the assessor through the end of February. After that, a formal protest will need to be filed between June 1 and June 30 with the Douglas County or Sarpy County Board of Appeals in order to protest to an independent referee. If you are still unsuccessful in getting your valuation adjusted, you can then appeal to Nebraska’s Tax Equalization and Review Committee (TERC).
It is also important to understand the timing and triggers for re-valuation by the assessor as well as the valuation methods used to determine value. The assessor may look at values differently than investors or appraisers, so knowing their methodology and modeling will help you prepare and present your materials in a manner to which the assessor can relate. Providing the assessor with sales comp info and/or the assessed value of similar properties may be helpful. You may be able to make an argument for equitable valuation based on the valuation of similar properties.
A 10% reduction in valuation may not seem like a lot. However, on a $1 million valuation, the reduction can lower your taxes by approximately $2000 per year. This means lower operating costs for your business or for your tenants. It can also translate to an increase in valuation in some cases.
If you would like assistance in reviewing your property valuation or preparing to appeal it, please call one of our managers or brokers.
This article appeared in our company newsletter in September of 2019. Please click here to download the entire newsletter.