Understanding Commercial Property Tax Bills

Black SkyscraperYour commercial property tax bill may be higher than it should be. A little bit of scrutiny can go a long way in reducing your expenses. While rising property taxes may be occurring simply because your local government needs more funding for communal needs like roads or schools, there are some steps you can take to ensure that you’re paying the lowest possible rate.

Check for Errors

You would be surprised by how often property assessors make errors when recording the data that determines how much property tax you owe. In particular, accidental typos can cause you to pay a significantly higher property tax bill than you should. For example, a building may be listed as 31,000 square feet, when it’s actually only 13,000 feet.

Another common error is that assessors may include charges for building improvements that never actually came to fruition. Say the previous owner planned on making renovations but ended up selling the building before following through. You may be getting charged for these nonexistent modifications.

Reevaluate Your Building’s Classification

In some cases, an assessor may misclassify your building. Besides putting it in a higher tax bracket, you may be missing out on tax credits, exemptions, and special rates that can reduce your property tax bill How buildings are classified differs by jurisdiction, so you’ll want your CPA to look into your local classification system.

For example, buildings may be classified as residential, commercial, industrial, or open space. Those classifications can change as new owners modify the space or utilize it in different ways.

Property may also be assigned as Class A, B, or C, depending on the building’s size, condition location, and other attributes.

For example, a building that was classified as a Class A structure when it was new may have become a Class B since the last evaluation, simply because of natural wear and tear over time. A good CPA can ensure that your property isn’t being inadvertently misclassified.

Perform a Comparative Analysis

Just because your property tax bill has remained the same over the years doesn’t mean that it’s correct. It’s quite common for property owners to overpay for years or even decades without even realizing that there were options available, and those mistakes may be passed on unknowingly to new owners.

Your CPA can compare and contrast your property with similar properties in the area to see if you could be paying a better rate. If there ends up being clear cause for a legitimate claim, you can negotiate with or appeal to local tax authorities to potentially lower your property taxes.

Our Team Can Help

Attempting to lower your property tax bill on your own can be a difficult and time-consuming process. The experts at Maxwell Locke & Ritter have the skills, experience, and resources to handle every aspect of the analysis so you never have to wonder if you’re overpaying. Call (512) 370-3200 or message us online now to speak with an experienced CPA.

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