Fighting For The Underdogs In Commercial Property Tax Appeals

Three myths about commercial property taxes

On Behalf of | Apr 26, 2022 | Big-box retail

All property owners should pay a fair amount of taxes, but what constitutes a fair rate? Many local governments and their legal allies have been advancing their own theories about the amount of property taxes big-box retail stores such as Walmart, Target and Kohls should pay. Much of this information is designed to sway public opinion against these businesses, even at the expense of fairness. Here are three myths you may encounter regarding the taxation of commercial properties.

Myth #1: Profitability should determine the commercial property tax rate

This myth is employed to make it seem fair that commercial property is taxed on a different basis than nearly any other type of real property in a city. When tax authorities assess the value of a residential property, they do so by calculating what the property would sell for under current market conditions. This myth suggests that the profitability of a store should play a leading role in its property tax assessment, regardless how much the store would actually sell for on the open market.

Myth #2: Market data is irrelevant

When a big-box store closes for business, sellers often face unfavorable market conditions when offering the real estate for sale. Buildings of such size and design have limited uses, and with the lack of motivated buyers, sellers must often let them go at a significant loss, and for much less than the property was assessed for tax purposes. A close look at market data regarding the sale of big-box retail stores will provide a telling story, but proponents of this myth don’t want that data to enter the conversation about what actually constitutes a fair tax rate.

Myth #3: Big-box retailers are trying to cheat the communities they operate in

The parties spreading this information would like to turn the public against big-box retailers and make it seem as though these businesses are trying to shortchange the communities where they conduct business. But no reasonable person believes anyone should overpay taxes. By conducting unfair tax assessments, that is exactly what the authorities are asking these retailers to do.

If you believe you have been overpaying your commercial property taxes, you have legal options you should know about.