Property taxes are always higher than you’d like, and these days, because real estate values have fallen in many cities, the taxes may seem especially excessive. Fortunately, it’s often possible to get relief.

It’s more common for property owners to take action to reduce the taxes on their homes, but commercial property is usually taxed under the same rules as homes. If you own the building in which you do business, it’s worthwhile to look into a possible reduction in taxes. And if you’re a renter who pays some or all of the property taxes, you or the landlord may be able to achieve some savings.

Typically, the local municipality levies property taxes based on the laws in your state. The procedures vary but, normally, the process begins with the local tax assessor determining the market value of your property. Then, the property value is multiplied by the tax rate (or “millage”) to set the amount of your tax bill.

As an individual, you can’t do anything to change the tax rate. You may, however, be able to reduce the assessed value of your property. If you succeed, your tax bill will be lower.

It would be ideal if the tax assessor updated property values each year. This usually doesn’t happen. The assessor may only review your property once every two or three years. This means that your tax bill may reflect what your property was worth two or three years ago. If property values in your community dropped 20 percent in the last two years, you may be taxed based on outdated information.

Tax assessment records are public. In some communities they’re available online. If not, you can go down to city hall to see the records for your property. You may find that the records contain wrong information. Maybe the assessor has listed more square footage than your building actually contains, or perhaps has incorrectly stated the age of your building or the type of construction.

Errors such as these can lead to an inflated valuation, meaning that your taxes will be too high. With errors of this sort, you can often get a lower valuation by simply talking to the assessor and pointing out the errors.

 

Market conditions

Beyond factual errors, the assessor may not be up to date on current market conditions for your type of building in your community. You’ll need to do some investigating to demonstrate current market conditions. You may need some professional help to ferret out the data.

You want to gather information about what buildings similar to yours have sold for in the last six to 12 months. While there’s probably an abundance of data available about home sales, the same won’t be true about commercial buildings. There are fewer commercial buildings being sold than homes.

It may be worth hiring an experienced commercial appraiser or real estate broker to help you gather the information and build your case for a lower valuation.

If you produce convincing data, the assessor may reduce the valuation. Unfortunately, however, many cities today are facing tough budget problems. The assessor should be objective in determining property values, but may be reluctant to take a step that will reduce tax revenues.

 

Taking an appeal

The assessor doesn’t have the last word on the subject. In most states, you can appeal the assessor’s valuation to a local review board. Check on when the board meets and the cut-off date for filing an appeal. If you miss the deadline, you’ll probably be out of luck for the current tax year.

If you didn’t use an appraiser or broker to help you in discussions with the assessor, consider hiring one to help you prepare your appeal. Some lawyers also do this kind of work. An experienced professional will often make the difference between winning and losing your appeal.

You’ll probably submit a written petition that contains the evidence supporting your appeal. Then you’ll be scheduled for a face-to-face hearing before the appeal board. If you’ve hired a professional to help you prepare your appeal, you can bring him or her along to speak for you at the hearing.

Within a few weeks after the hearing, you’ll get a written report on whether the appeal board reduced your valuation, and by what amount.

If you’re not satisfied with the result, you can usually go to a state-level board or commission to challenge the valuation. Again, there will be a strict filing deadline. If you miss it, you’ll be stuck with the valuation until next year.

One final tip: Do the math before you spend a lot of time pursuing a tax reduction or hiring a professional. Make sure that the ultimate savings are worth your while. You don’t want to spend hour after hour digging up data or pay a thousand dollars to a professional if the most you can realistically save on taxes is just a few hundred dollars.

On the other hand, if you feel you have a shot at significant savings, it’s usually worth spending time – and even investing money – to seek a reduction in your tax assessment. Many owners have embarked on such a quest with success.