Rental concessions such as free rent and reduced rent are an actual cost of doing business and reduce the gross effective income of an apartment complex. Unfortunately, most assessors ignore these expenses altogether. Also, assessors equally overlook replacement reserve allowances for capital expense items. Be sure to account for these reserves as a line item expense. Replacement reserves and rental concessions represent a prime opportunity, and one generally accepted in the industry, to reduce the gross effective income reported to the taxing authorities.

And do not accept the assessing authority’s valuation as error free. They have innumerable properties to assess and don’t know your property the way you do. This may result in the assessor imputing average market rents for a complex that actually generates far lower rental income or overstating the number of rental units and attributing “phantom” income accordingly. The point is, review your bill and ask questions.

Eric Kassoff is a partner at the Washington, D. C. law firm of Wilkes Artis, Chtd., the Washington, D. C., Maryland and Virginia member of American Property Tax Counsel (APTC), the national affiliation of property tax attorneys. Mr. Kassoff can be reached at ekassoff@wilkesartis.com.