Minnesota’s deadline to file an appeal for taxes payable in 2017 is April 30, 2017, which means it’s time for commercial property owners, tenants, managers, etc., to decide if a tax appeal is appropriate. This post answers a few questions that I am frequently asked.

  1. My taxes are really high, should I appeal?

Property taxes are based on the real estate value, so the first question before deciding to file an appeal is actually, is my value too high? If you don’t have a good sense for the value of your property then you should have a property tax professional take a look at your situation. I provide free reviews for any commercial property taxpayer, and so do many other property tax professionals.

If you are well versed in the market for your property and have a good understanding of the value, or have a recent appraisal, then compare your analysis against the assessed value on your tax statement. If your analysis or appraisal, is similar or higher than the assessed value, then you probably don’t want to appeal. If it is lower, you may have a case for an appeal. At this point you should contact a property tax appeal attorney to discuss the potential for a successful case.

Additionally, most commercial properties are owned by LLC’s or another class of entity. It is important to note that Minnesota only allows individuals to personally file an appeal on property they own in their own name. So, if your property is owned by a company you will need a property tax appeal attorney to handle the filing.

  1. Is a tax appeal litigation?

Technically, a tax appeal is litigation. However, in most cases traditional litigation actions, such as discovery, motions, hearings, etc., never occur. Most appeals have a more transactional process. For example, an appeal is required in order for the assessor to adjust the value, but the matter may still be entirely resolved through negotiations and can be very friendly. In my practice, one of my core philosophies is to maintain quality respectful, and when possible, friendly, relationships with assessors. A good working relationship with the assessor is important for working through the challenging issues of the appeal.

In short, while an appeal can lead to a trial, it generally does not require full blown litigation.

  1. Will an appeal now cause higher taxes in the future?

Assessors have a duty to value real estate at its market value. As a result, any retaliatory increase to a non-market value would be illegal. I have never experienced an assessor raising values in response to an appeal being filed. However, the legitimate concern is whether or not an appeal will reveal information to an assessor that could cause a value increase in the future. For example, let’s say an assessor believed that the average market rent for a specific property was $10 per square foot, but then during the appeal they find out that the average market rental rate for the property is actually $15 per square foot. The assessor may not be able to ignore this fact going forward, and the result could be a higher valuation based on the higher rent. In fact, this is one of the many things that I look for when I conduct preliminary reviews for potential appeals, and it is one of the reasons that I always recommend talking to me or a property tax professional before filing an appeal.

In conclusion, if you feel your commercial real estate taxes are too high, ask me or a property tax professional to take a look.