A guide to Property Tax Reassessment

When it comes to property taxes, most investors think about the annual tax bill that they need to pay. However, another important aspect of property taxes that investors should be aware of is property tax reassessment. 

Property tax reassessment is the process where the value of a property is periodically reevaluated for tax purposes, often following changes in ownership, significant renovations, or on a scheduled basis set by local laws, which can range from one to five years. The outcome of a reassessment can lead to changes in the property tax bill, potentially increasing it if the property’s value is found to have risen.

Understanding the reassessment process is important for investors to anticipate potential changes in their property tax obligations. Municipalities conduct reassessments to ensure tax fairness and accuracy, reflecting the property’s current market value. Should a property be reassessed at a higher value, investors face higher tax bills, affecting the overall return on investment.

Reassessments can also work in favor of the property owner if the property’s value decreases, leading to lower taxes. Property owners have the right to appeal reassessments if they believe them to be inaccurate. Talking with a property tax attorney can be helpful, as they can offer expert guidance through the appeal process, attempting to secure a fair valuation and, ideally, reduce the property tax burden.

This professional assistance can be necessary in dealing with the complexities of local tax laws and reassessment procedures, making sure that property owners are not unduly penalized by incorrect valuations.

The Impact of Reassessment

Reassessment can have a significant impact on an investor’s property tax bill. For example, if an investor buys a property for $100,000, and the local tax rate is 2%, the annual property tax bill would be $2000. However, if the property is reassessed at $120,000, the annual property tax bill would increase to $2400.

Investors should keep reassessment in mind when evaluating a potential investment property. It’s essential to research the frequency of reassessment in the municipality where the property is located. Additionally, investors should factor in the possibility of a reassessment when estimating their annual expenses for a particular property.

How Reassessment Works

Property taxes are a source of revenue for state and local governments. To ensure that property taxes are fair and accurate, most states require that properties be reassessed regularly. Property tax assessors are generally county-, city-or township-level officials responsible for assessing and reassessing property within their jurisdiction. The reassessment is handled at the local level, but state law determines how often property in the state is reassessed. 

How often are homes reassessed? Intervals of reassessment between appraisals vary from one to 10 years, depending on the state. Reassessment intervals can also vary depending on the type of property. In some states, properties are reassessed every year (for example, in Alaska or Arizona), while in others – once every ten years (for example, Connecticut), and in some – whenever the change of ownership occurs, like in California. To learn the reassessment interval in your state, check out this website.

Residential properties are typically reassessed more frequently than commercial properties. Regular reassessment ensures that property taxes are based on the property’s current value, providing a fair and stable source of revenue for state and local governments.

What to Expect After Your Property Is Reassessed

The property tax assessor calculates the fair market value after it is reassessed based on the location and property type. The technique for determining this value will differ depending on the current location.

After the reassessment is finished, many property tax offices will contact the owner to inform them of the new assessment results. If the property owner thinks the reassessment is incorrect, they have a right to challenge or appeal it.

Reassessment does not guarantee that property taxes will rise. The property value and the real estate market in an area will influence the results. If the value of the real estate in the region is declining, a reassessment might result in decreased property taxes for an owner. A reassessment may also produce no change in the property’s value.

How to Appeal a Real Property Tax Reassessment

The county board of tax assessors is responsible for assessing real and personal property by the local tax code. This includes sending assessment notices to property owners that provide information on filing an appeal if the taxpayer believes their assessed value is inaccurate or otherwise unfair. 

These notices must be sent annually, regardless of whether the county board agrees with a taxpayer’s return on personal property, including airplanes, boats, or business equipment and inventory. They inform taxpayers of their right to appeal their assessment and ensure transparency and equity throughout the assessment process. When used effectively, the annual assessment notice can help prevent disputes between taxpayers and the county board in the future by providing all necessary information upfront.

Submit a Property Tax Reassessment Appeal

Property owners wishing to appeal their property tax assessment have 45 days from when the assessment notice was mailed. An appeal may be based on factors such as taxability, value, uniformity, or the denial of an exemption. The written appeal needs to be filed with the Board of Tax Assessors. After reviewing the appeal, the Board may hold a hearing to discuss the matter further. If the Board decides not to overturn the original assessment, the taxpayer may file an appeal with the Board of Equalization. The appeal must be filed within 30 days of the date of the Board of Tax Assessors’ decision. The Board of Equalization will then review the case and decide whether to uphold the original assessment or make changes as necessary.

Take Control of Your Property Tax Reassessment

One of the greatest ways to take control of your property tax reassessment is by working with an attorney. Attorneys specializing in property tax law use a data-driven approach to help homeowners and businesses appeal their property taxes. Their main goal is to reduce your effective property value, secure a three-year monetary freeze, and significantly lower your overall property tax bill.

By working with an attorney specializing in this area, you can rest assured that your reassessment will be handled professionally and efficiently. Your attorney will handle every aspect of the process for you, including providing legal representation at any Board of Equalization hearing required. They will also make a strong case for fair and accurate property tax assessments free of errors or inconsistencies. So if you want to take control of your property taxes, consider working with an expert in this area.

In Summary

A property tax reassessment is a periodic reevaluation of a property’s value for tax purposes. Investors need to know about reassessments to be prepared for any possible changes in their taxes. If an investor believes that the reassessment is incorrect, they have the right to appeal it. The best approach is to work with an attorney specializing in property tax law to ensure that the reassessment is handled correctly so you can begin to plan for your future in commercial real estate.