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Know The Process

Keep the belt tightened to combat rising property taxes.

"Property values will likely increase over the next few years, so it is as important as ever for property owners to ensure that their property is fairly assessed."

In Alabama, as in much of the country, many property owners tightened their belts during the Great Recession, looking for ways to reduce operating costs for tenants and themselves. For some owners, a little bit of property tax relief provided a silver lining to the loud of plummeting property values that followed the crash Ben Bernanke and other economists assure us that better times lie ahead, however, property owners should remain vigilant in monitoring properties for over-assessment as the recovery plays out.

First and foremost, taxpayers should familiarize themselves with the general property tax laws and procedures in each market in which they own or in tend to own real estate. Though generally created and governed by state law, the property tax appeal process is often speckled with local nuances and specialized interpretations of law.

Learn key dates, including the valuation date, when assessors distribute notices, and the appeal deadline. How do assessors determine market value? Must an owner pay the full tax bill to preserve the right to appeal? Does the property qualify for any tax exemptions or alternative valuation methods? Local counsel can be an efficient and effective way to monitor these and other property tax considerations.

Perhaps in response to a growing number of tax protests, tax assessment officials are increasingly adding procedures and requirements concerning valuation disputes. These local rules range from requiring specific methods of filing protests - whether on a certain form or by mail, fax or email- to establishing early deadlines for submitting a property's financial statements for consideration of the income approach to valuation. Although the legality of some of these additional requirements is unclear, it is important for the property owner to observe these rules to avoid unnecessary appeals and litigation.

Knowing the correct deadlines is essential, and is more challenging than it may seem. For example, Alabama taxpayers have 30 days after the valuation notice date to file a protest. Each of Alabama's 67 counties sends out valuation notices on its own schedule, typically between April and midsummer. Georgia's 159 counties have similarly staggered notice periods and deadlines. To further complicate things, Alabama does not require valuation notices if the property value is unchanged from the previous year. Nonetheless, the taxpayer has only 30 days from the notice date to file a protest.

As in many other states, Alabama assessors send tax notices to the property's owner of record. This means that tenants - which often pay the taxes and have protest rights under their leases - generally do not receive notices from the assessor. In such cases, the tenant needs to remind the owner to forward valuation notices as soon as they are received, and should independently confirm the notice dates and values with the taxing jurisdiction. In an expanding economy, the valuation date can significantly affect the property's assessed value. For example, Alabama assessments in any given year reflect the property's value as of Oct. 1 of the previous year, so 2013 taxes are determined by the value as of Oct. 1; 2012. Accordingly, an increase in market values in the first quarter of 2013 should have no bearing on the value used to determine 2013 taxes. When reviewing an assessment for accuracy, a taxpayer should consider all factors affecting the property's value. Taxpayers are often focused on the big picture in ad valorem tax disputes such as the net operating income, rent roll, occupancy, capitalization rates and the like.

There is more to be mined in less obvious areas, however. Is the property subject to any title restrictions, such as use limitations or conservation easements? Are there any environmental impairments? Is the property specialized for the particular use of one owner, thereby limiting its market value to potential buyers? Is the property's value affected by "super adequacy," which occurs when the cost and quality of improvements exceed market requirements but fail to contribute to the property's value? An example of the latter would be a government building with security features well in excess of those a private business would require - or pay for. Property values will likely increase over the next few years, so it is as important as ever for property owners to ensure that their property is fairly assessed.

adv headshot resize Aaron D. Vansant is a partner in the law firm of DonovanFingar LLC. the Alabama member of American Property Tax Counsel (APTC) the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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