Updated december 2020
The coronavirus epidemic and its impact on the valuation of property
The epidemic and resulting closure of businesses has had an enormous effect on the economy. But, one aspect which is often overlooked is the effect it has had on the value of operating businesses. We believe it has created an opportunity for many property owners in Nevada to seek a reduction in the taxable value of their property, which in turn, may reduce the tax assessment.
Generally, the taxable value of property is determined using a modified replacement cost approach. But, the assessor has to reduce that value if it exceeds full cash value, which is usually calculated using an income capitalization approach. For operating businesses, the assessors usually rely on the revenue and expenses for the preceding calendar year, which this year will reflect the impact of the epidemic and Governor Sisolak’s order closing businesses. It is, therefore, important to evaluate whether a projected value based on an income approach is likely to warrant an adjustment to the taxable value of your property.
It’s also necessary to evaluate how Nevada’s statutory tax cap is affecting the taxes actually assessed on your property. The tax cap limits the amount property taxes can increase from year to year and it may already be reducing the taxes assessed on your property. Consequently, it’s necessary to determine whether the likely taxes to be assessed on a taxable value adjusted for the effects of the coronavirus will result in tax savings in excess of the savings already realized as a result of the tax cap. If it will, being proactive in addressing your property tax situation can result in meaningful tax savings.
The deadline for filing an administrative appeal to the county boards of equalization is January 15, 2021. Our property tax attorneys know the critical legal issues and valuation factors that affect the tax treatment of property and are prepared to assist you in evaluating and, if appropriate pursing, a reduction in your property tax assessment.
Paul D. Bancroft
American Property Tax Counsel (APTC)