The 2009 property tax appeal frenzy is well underway. It’s sure to be one of busiest years in recent memory. There’s also no reason why it shouldn’t prove to be one of the most productive years in a long time. However, I think that there may be some misconceptions about what to expect and, perhaps as important, what not to expect.
I think we all agree that values have declined. It’s close to impossible to argue otherwise. That said, we are not going to find ourselves “shooting fish in a barrel”.
There’s more to it than simply raising our arms and saying, “we all read the papers, we all watch the news…” Of course values have declined in virtually every sector. Companies and entire industries are facing double-digit loses. Closures and layoffs are rampant. Need I go on?
So, why isn’t it as simple as filing an appeal and waiting for a refund check?
Quantification is king!
Probably the most important issue that must be taken into consideration for tax appeals in 2009 can be summed up in one word:
Taxpayers carry the burden of proof in a tax appeal. They must prove that the assessment is excessive and in order to do that they must present evidence. However, thanks to the chaos in the capital markets and the resulting credit freeze, transactions are scarce, to say the least. An excerpt from a recent CoStar article reads:
“with the capital markets in disarray and few comparable transactions upon which to build a foundation, buyers and sellers can’t agree on pricing.
In fact, one widely watched transaction-based index published at the MIT Center for Real Estate couldn’t even produce a retail index for the fourth quarter due to the dearth of transactions.
The overall sample size for various other property markets was “scarily low,” acknowledged David Geltner, director of research at the MIT Center for Real Estate. “
So, although we may all agree that values have declined, proving values for the 2009 tax year becomes more challenging due to the lack of reliable market information.
2009 presents a great opportunity for companies to significantly reduce their property tax liabilities. However, It is not realistic to think that appeals will be a walk in the park simply because of the current economic conditions. If anything, 2009 tax appeals will require more work, diligence and creativity than in the past. The good news is that it will be worth it.
This is Part one of a three part series on 2009 property tax appeals. To read Part II & III please visit Taxing Issues– Property Tax Blog.