U.S. Property Tax Association, Inc.U.S. Property Tax Association, Inc.2024-03-08T22:39:25Zhttps://www.roberthilllaw.com/feed/atom/WordPress/wp-content/uploads/sites/1103450/2019/06/cropped-robert-hill-law-favicon-32x32.pngOn Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506782023-11-22T21:17:44Z2023-02-07T15:55:32ZPaying taxes is part of owning a commercial property. It slightly differs from paying residential property tax, as it's higher and has different depreciating rules. The amount you pay on taxes is based on your property value. However, due to appraisal mistakes and misclassification, you may pay higher taxes on your commercial property than you should. Here are two signs that may indicate so.
Insufficient information on the property’s value
It will help to hire an appraiser who is experienced in your property type to inform you of your property's value. They will use three approaches to determine this - the cost approach, the income approach and the sales comparison approach.The cost approach states the property's value is equal to the land value plus total costs of construction minus depreciation. The income approach considers the income a property generates to determine its value, and the sales comparison approach uses data from recent sales of similar properties in the area.Your appraiser may use other methods besides these. Regardless, you need to be informed of your property's value to estimate the correct taxes associated with it. Even though the appraiser will handle the valuation, you should ask questions to get adequate information. If you are not well informed of your commercial property value and any changes to it, you may be overpaying taxes.
Your tax bill is extremely high
At times, you can easily tell you are overpaying when your tax bills are very high that you may end up paying out of pocket. However, to notice this, you need to follow up on your payments. Before sending a tax bill to the accounts payable, always go through it.High commercial property taxes can significantly lower your profits, affecting your business growth. If you believe you are overpaying these taxes, consider your options to protect your rights. ]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506762023-11-22T21:17:49Z2023-01-30T15:37:47ZProperty taxes apply to commercial and residential real estate, but you must ensure that what you pay is what’s actually due. Taxing authorities may make errors when they calculate the taxes your company owes. This might be due to using an inflated value or something similar, but it can lead to your company paying too much in taxes.
For some properties, an abatement is one option that can save money on taxes. An abatement is allowed for economic development, including expanding a company or redeveloping an area, so it’s beneficial for businesses to learn more about them to determine if your company qualifies for one.
What types of limitations apply to abatements?
Abatements are typically capped at15 years; however, there are instances in which that can be extended to 20 years. There are also monetary limits to abatements. State law caps the total abatement to the greater of either $200,000 or 10% of the net tax capacity of the taxing authority.Another limitation that applies is that properties that are located in special taxing districts can’t have abatements. Additionally, the Minnesota general property tax isn’t subjected to abatement. Other location-specific restrictions might also apply.Commercial property taxes must be closely scrutinized so you can act if there’s an error. Appealing acommercial tax assessment requires you to move quickly because of time limits. Whether your company has received an abatement or not, you must ensure that you’re only paying what you should. Working with someone who knows the law and isn’t afraid to stand up for companies is beneficial in these cases.
]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506732023-11-22T21:17:53Z2023-01-09T00:19:42ZSome people might see a company that challenges its taxes in a bad light. They might think the business owner is looking for ways to avoid contributing their financial dues, while happily taking advantage of all the services taxpayer money gets them.
In most cases, however, challenging your property taxes is just good business sense in the same way that you might question a supplier’s or commercial landlord’s price rise. Making a business profitable can be tough, and you cannot afford to throw money away needlessly by paying money on excessive taxes. That’s a big difference from trying to evade your share of taxes.
But aren’t the local property tax office calculations correct?
Not always. Sometimes they are off by a large percentage because the tax assessor vastly overestimated the value of your property. Maybe they did not realize the market value of your area has gone down, or perhaps they are not taking into account individual factors that make your humble premises worth much less than their more grandiose neighbors.The law expects you to pay commercial property tax, but it also gives you the right to appeal if you think your bill is incorrect. The technical term for appealing your taxes is abatement. Consider the right to apply to have the authorities review your bill as part of the service you are paying tax for.You still, however, need external legal help to file a commercial property tax appeal in the correct manner in order to give your business the best chance to pay only what you should and not a cent more.]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506702023-11-22T21:17:58Z2022-12-27T18:17:43ZAnyone who owns a commercial property in Minnesota pays a property tax. Several factors determine the amount you pay, including your property value and the estimated market value. Thus, it is vital toknow how this tax type works.But why does Minnesota charge commercial property tax? Here are examples of state and community services your property tax may fund.
Education
Some of the education aid in Minnesota is funded by property tax. The state pays a certain amount to school districts for educational purposes, including general and special education, transport and other programs.
Mental health
The number of people suffering from mental health issues is increasing, and the state does its best to help them. A fraction of the property taxes collected can help provide mental health resources.
Health care
Healthcare services can be costly. For this reason, the state may use the property tax it collects to fund healthcare programs. An example is MinnesotaCare which covers residents with low income. Another program is Medical Assistance (MA), which works similarly to MinnesotaCare, but has lower income limits.
Human services
Minnesota has several programs to ensure every resident can meet their basic needs. Hence, it may fund such programs with property taxes. Examples include The Minnesota Family Investment Program (MFIP), which helps parents meet the needs of their children and Minnesota Supplemental Aid (MSA), which supports aged residents and those with disabilities.
Highway maintenance
The state may use some of the funds it collects from property taxes to build and maintain highways, streets, and bridges. This ensures residents access different regions without difficulties.Paying a commercial property tax is beneficial. However, at times, you may be charged incorrectly. Therefore, you should learn how toassess your property tax and act accordingly if you are being taken advantage of.
]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506672023-11-22T21:18:03Z2022-12-14T03:48:43ZProperty assessments are more “educated guesses” than factual
A lot of times the problem is that the assessed value of a property and its appraised value are two different things. The tax-assessed value may be roughly based on historical data on property values and a general market comparison to see how other, comparable properties are valued on the open market.
An appraisal, however, is much more accurate. During an appraisal, an expert looks at the current market conditions (which, when the market has been volatile, can be much more accurate than historical data that takes a long approach) and the actual state of the property itself.
This means that an appraisal of your commercial property can produce a dollar value that differs significantly from its assessed value. The assessor’s entire valuation process may take place online – meaning that they never even see your property in person. An appraiser, however, gets an in-depth look at any flaws in the property, including repairs that you’ve been putting off for a while or any other problems that impede its use or value.
If you’ve been hit with an unreasonably high tax bill for your commercial property, you don’t have to simply accept it. You can fight back with the right legal guidance.]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506652023-11-22T21:18:07Z2022-11-28T19:48:15ZThe benefits of owning a commercial property cannot be overstated. Unfortunately, owning a commercial property also has another side: costly property taxes. Although most commercial property owners view these taxes as a fixed cost, this isn’t the case. Fortunately, you can challenge and negotiate your commercial property taxes.
If commercial property taxes have been eating into your profits, consider taking the following steps:
1. Know how much you’re paying per annum
If you’re like most commercial property owners, you may have never considered your property’s assessed value and the amount you pay per annum. If you have a large real estate portfolio, you may not have the time or expertise to examine your bills. However, if you notice that the numbers aren’t accurate, ensure you visit your local assessor’s office and file a petition for a hearing.
2. Pay on time to avoid extra fees
You can pay commercial property taxes in two installments per year. Remember, however, there are penalties for paying your tax bills late, and they can accrue quickly. Make sure to keep your eyes on the bill so that the taxes are paid timely.
3. Visit your local assessor
Create time to visit your local assessor and educate yourself more about your properties. Your local assessor will help you learn how much your properties are worth and how properties within the same jurisdiction are assessed. This information can help determine if your commercial buildings have been overassessed.
4. Make use of the appeals process
Commercial property taxes are based on the value of the property. Therefore, if your taxes are high, you should first determine the value of your property and compare that against the assessed value on the tax statement. You should appeal if the appraisal value is lower than the assessed value.You can use the above tips if you feel your commercial property taxes are too high. But unfortunately, the process of reducing commercial real estate taxes can be complicated. Therefore, consider seeking legal guidance to increase your odds of success. ]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506622023-11-22T21:18:11Z2022-11-11T01:32:33ZBusiness owners are often interested in profit margins. They know that they need to spend money and that the company is going to have a certain amount of expenses. There’s no way around this, so they don’t view it as a loss. They just want to see how much money they’re making based on how much that they’re spending – what is the return on investment? .
For instance, business owners face costs like buying materials, paying employees, paying the utilities and covering property taxes at the end of the year. They also likely have to buy certain types of insurance, such as workers’ comp insurance or simply property insurance for the structure. When any one of these financial obligations becomes overly inflated, it could cut into the profit margins and make it so a business model that is otherwise working is not nearly as profitable as it should be.
Why would your taxes be too high?
There are a lot of different reasons why your commercial property taxes could be too high. Maybe your building was misclassified and you’re being taxed as a type of property that you don’t even own. Perhaps the assessment was inaccurate, so they’re taxing you at a much higher property value than what your property actually has in terms of fair market value. Or, perhaps there are different tax credits that you could’ve taken to reduce what you had to pay, but you missed them or were wrongfully denied those credits.No matter why this has happened, you can see how problematic it is for your bottom line if you’re paying far too much in property taxes. You may need to know exactly what steps you can take to keep your business profitable.]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506602023-11-22T21:18:16Z2022-10-28T16:27:10ZIf you’ve been a business owner over the last decade, you’ve probably seen your property taxes go up year after year. You may feel like taxes do nothing but go up and that it’s always going to be a financial liability as you have to pay more and more money to the government just to keep running your business the same way that you were before.
But is this how commercial property taxes work? Or could they go down?
They are tied to the value of the property
The thing to remember is that the value of your property itself is what determines how much you have to pay in taxes. So, should the value of that property drop, then you could expect the property taxes to fall at the same time. The reason that you may feel like taxes only go up is that property values in the United States have been on a historic rise in recent years. If you bought your business in 2012, that was right after the economic recession of 2009. Property values were quite low, so people who bought at this time may have seen their values double or even triple since then.That does not mean that this increase is going to continue to happen forever. Commercial property values are different than residential values because they depend on the level of economic activity in the area, the location of the property and much more. It’s not just about the demand for housing, but how active other businesses are in the area. If you believe that you’re being taxed unfairly or that you’ve been asked to pay far more than you should, it may be time to look into your legal options.]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506572023-11-22T21:18:20Z2022-10-14T18:51:04ZTax 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.]]>On Behalf of U.S. Property Tax Association, Inc.https://www.roberthilllaw.com/?p=506542023-11-22T21:18:27Z2022-10-01T17:13:01ZAmid widespread talk of a coming global recession, it’s important to consider how a recession can affect commercial property values. A recent analysis by commercial real estate (CRE) brokers Cushman & Wakefield looks at – among many other things -- the impact of a mild recession. This is the type of recession it says is the most likely type to affect the U.S. within the next year.
Their analysts explain that “all real estate is intensely local….Even within each asset class, a large portion will likely outperform our forecasts, and some will likely underperform.”
Not all types of commercial properties are negatively affected
Some types of commercial real estate property that could thrive include:
It’s also important to note that the value of a commercial property is typically affected by different economic factors than a residential property would be. Those that lose value are the properties that experience a drop in occupancy and payment issues for those occupants who remain. As we noted in our last post, vacancies can affect commercial property values.The Cushman analysts also note, “The fundamentals of the US economy are sound, which will help limit the magnitude and scope of a potential downturn.” As property values fluctuate, even throughout the phases of a single recession, tax assessors need to adjust their numbers appropriately. It’s crucial to make sure that you’re not being assessed at a higher value than your commercial property is worth. If you believe that your tax assessment is too high, you can and should appeal the assessment. With sound legal guidance, you can have best possible chance of prevailing in an appeal.]]>