Tax assessors can make a number of different errors as they determine the value of a commercial property. If the property is overvalued, owners can be assessed more in property taxes than they rightfully owe
Unfortunately, commercial real estate owners often don’t know what precisely goes into property valuation. Therefore, they may have no way of knowing that their property is overvalued and that their tax liability is too high. One all-too-common type of error involves the misclassification of property by assessors.
There are all kinds of misclassification
There are a number of ways in which a commercial property can be misclassified. For example, there are various construction classes that are based on the materials used in a building’s construction and renovation, such as insulation, fireproofing, metals and more. The class can affect the building’s valuation.
Often, assessors will even misclassify a property as commercial when it should be classified and residential. Whether a property is considered commercial or residential can depend on how it’s used, who occupies it and how local statutes are written.
Some properties are more appropriately classified as commercial/residential. Mixed-use buildings and properties, which are becoming increasingly popular (particularly in some urban areas) may qualify for this classification.
If you have been paying too much in property taxes because your property was misclassified – or for any other reason – it’s crucial to do some investigation and determine whether you have grounds for appeal. With experienced legal guidance, you have the best possible chance of prevailing with your appeal and lowering your property taxes so that you’re not paying more than is warranted.