When the market value for your commercial property decreases, this change does not automatically adjust your tax assessment. Many markets show little or no change in tax obligations after the real estate prices drop. This oversight could have a substantial impact on your investment and your ability to meet your tax requirements if your business revolves around the sale of commercial properties or if you incur a significant annual tax burden.

Understanding the causes for appeal

In Texas, owners of commercial property have the right to appeal their tax assessments each year. In some cases, this tactic is useful to reducing your tax burden and improving the viability of your business. There are many valid causes for contesting your property taxes, but one of the most misunderstood is ‘unequal appraisal.’ Here is what you should know regarding unequal appraisal as it relates to property tax appeals:

  • It shouldn’t matter if the recorded value of your property is below the market value, you might be able to find remedy through comparable properties that are assessed at lower rates.
  • If the difference between your property and some comparable properties equates to a locally-specified percentage above the median value for these appraisals, you could have grounds for an appeal.
  • There are several approved methods for acquiring comparable property values. One method involves having an appraiser use income and expense calculations (wherever available) for similar businesses to assess value. This process can be lengthy, expensive, and may be suited more for larger businesses.
  • Another standard method uses the ‘appraisal roll’ from an Appraisal District to demonstrate that similar properties have lower tax rates. This method is cost-effective, though the property owner may still have to supply justifications for why these differences exist. In both procedures, you need to provide an appropriate number of comparisons, though this number could be decided by the presiding judge.

Making the best decision for your business

There is a still a good deal of subjectivity in a commercial property tax assessment that requires an experienced eye to recognize the outlets and arguments available to a business. If you’re a commercial property owner who feels they’ve been overtaxed, contact an attorney who can guide you through the assessment and appeals process.