Advanced Property Tax Strategies For 2016

As the real estate bull market continues unabated, astute property owners will carefully scrutinize their 2016 valuations. Property tax reduction efforts are more likely to succeed by using the following advanced strategies. Here’s the countdown:

8. Use The Cost Approach To Test Reasonableness Of New Construction Assessments. Although the sales comparison approach and income approaches to value are most often used in real estate valuation, the cost approach is highly relevant if the subject property is new or “new-ish.” To calculate, take the cost of replacement minus depreciation plus the land cost. If the calculated sum is less than the 2016 assessment, a reduction may be in order.

7. Collaborate. Many owners appeal property tax assessments on their own, some successfully. Most owners, however, would be well served to collaborate with professionals knowledgeable in local evaluations, whether property tax consultants, appraisers, real estate licensees or attorneys. The right team can accomplish more than an individual. I have seen great results when collaborating with local real estate and legal experts.

6. Informally Meet With The Property Appraiser July 1-August 15. I am a huge proponent of these informal meetings as opposed to filing a petition during TRIM and/or going straight to a Value Adjustment Board (VAB) hearing. Sitting down face to face with property appraiser personnel can bring great results when the tax rep provides solid evidence supporting a reduction.

5. Stay Current With Ever-Changing Property Tax Laws. Every year the Florida Legislature changes property tax laws. This year alone, new laws governing active duty veterans’ exemptions and VAB procedures were enacted. As the field becomes ever more complicated, professional advice is invaluable.

4. Let Sleeping Dogs Lie. Most properties are not overassessed. In fact, out of 10 properties that we review, only one qualifies for appeal. If a property is not overassessed, drop it. Don’t waste your time or the property appraiser’s.

3. Apply For All Exemptions. Each year, a number of new, highly segmented exemptions and assessment caps become available. Examples include the 10% non-homestead assessment cap, seniors’ exemptions and portability. Exemptions are not automatic — each initially requires an application.

2. Don’t Ignore The Property Appraiser’s Sales Verification Form. The property appraiser reviews each sales transaction to determine whether or not that sale will be used in the assessment process. Sales verification questionnaires are mailed to sellers and buyers post-closing, providing them an opportunity to disclose transaction information to qualify the sale as “arm’s length” or not. That determination can have huge valuation implications. A qualified real estate attorney or property tax consultant can provide the details.

1. Do Not Assume That Tax Savings Are Unavailable When The Capped Value Is Lower Than Market Value. The 10% cap on non-homestead assessed values may mean that a property’s assessed value is significantly lower than the “just” or market value. Those property owners often assume, therefore, that a market value reduction will not translate into actual tax savings. That’s not true. We have obtained some enormous tax savings in such cases even though the valuation reduction only applied to the school tax component of the tax bill (+/-50% of the total millage). This revelation opens the door for appeals that many owners might otherwise deem fruitless.

(Michael S. Hagen is a Fort Myersbased property tax/real estate attorney and owner/broker of TaxCuts 1, Inc., a property tax consulting firm. Hagen was counsel to the Lee County Property Appraiser for 10 years and, since 2003, has represented property owners across Southwest Florida in valuation and exemption appeals. For more information, please call (239) 275-0808, e-mail Info@TaxCuts1.com or visit TaxCuts1. com and MikeHagen.com.)