Tax Season: When It Comes to Property Taxes, Treat Your Home Like the Commercial Big Boys

Should you treat your home like a commercial property when it comes to property taxes?

For many, a home is their biggest single investment. So why NOT do what the big boys do and scrutinize every expense on your home, from repairs and maintenance to property taxes? We reached out to Rob Wheelock for a sneak peak at how the pros keep those taxes down.

CD: Rob, are you telling me that owners of commercial properties look at their appraisals every year?

Rob:Yes, at least the biggest majority of them do. Commercial is different from residential, in that there are no exemptions or caps, which leads to some potentially large swings in value. I work with Alliance Tax Advisors in business development and every once in a while, I’ll speak to an owner that hasn’t used a consultant, but for the most part, all the big boys use someone. It’s just smart business. Remember the three methods of appraisal the Appraisal Districts use:

1. Sales Approach (the price at which a property would transfer for cash or its equivalent under prevailing market conditions).

2. Cost Approach (Preferred method for special use properties, new construction, limited sales data, or limited income data).

3. Income Approach (Capitalization rates based off net operating income).

Licensed Property Tax Consultants look at all three approaches and work the one that produces the lowest valuation. Let’s say you own a small strip center with three tenants and one tenant moved out and their space has been sitting empty for 6 months. A Tax Consultant would probably look at the income approach because income would be down for the year, which leads to a lower valuation.

CD: Smart. But at what cost point in a residential property is this cost-effective?

Rob: I say there’s no amount too small to save, so I would have my valuation looked at every year, regardless of the value. Property Tax Managers works on a contingency basis and looks at every opportunity to find savings. We have a client that lives behind the Pink Wall in a small condo that was valued at $79,450 last year that we were able to reduce to $36,320 saving her $998 in property taxes. Not bad. And the good news is, they left her alone this year, so she’ll save another $998. Since she has a Homestead Exemption, the most they can increase her value in any year is 10%, so she will be saving for a minimum of 8 more years. Bottom line is, why pay more than your fair share, if someone like us will do all the work for you? Our service shouldn’t be viewed as a cost; we save our clients’ money. It only cost them money if they don’t use our services. Maybe I’m cheap (OK, I know I’m cheap), but I’d rather save money than pay more than my fair share.

CD: I concur! Don’t get me started! What are some other tricks we can learn from the commercial guys?

Realize there are others who knows more about the property tax code, appraisals and valuations than a typical developer/investor. Utilize the professional services available that help bring value and savings to your bottom line. Realize that you are not a licensed property tax consultant, and that a trained team, that works billions of dollars in property values, will always out perform an individual, and save you time and money in the process.

I have to give a plug to Alliance Tax Advisors where I work in business development. This year they will review over $24,000,000,000 (yes Billion) in assets, saving developers and commercial property owners millions of dollars. If commercial property owners leave it to the pros, why shouldn’t a home owner?