February 2nd, 2009
The Devil is in the Property Tax Classification.
This past weekend I saw "Faust" at the Minnesota Opera. Faust is an old man
who makes a deal with the devil. Not for money. Not for fame. But to regain
his youth so he could go out and seduce young ladies. (The story was written
in the 16th century, they didn't have Viagra back then.) So, distracted by a
vision of a pretty woman, Faust signs the Devil's contract without reading
the fine print. Bad things happened. In addition to committing his soul to
spend eternity in Hell, 3 innocents died including a baby.
So, what does this have go do with your Property Tax Classification? Am I
implying that the Assessor is the Devil? No. I have found most assessors to
be good professional people who have a challenging job. And sometimes, like
Faust, they make mistakes and innocent people are harmed.
A builder sent me hundreds of property tax assessments to review. I told him
"I believe your Business Park outlot is overvalued."
He replied: "what business park?".
He hadn't realized that his outlot for a residential subdivision was
misclassified. This resulted in a much higher tax rate AND a higher value
assessment. How much higher?
In 2007 this property was classified as agriculture non homestead with an
assessed value of $2,300,000. In 2008 it was misclassified as Business Park
with an assessed value of $3,200,000. The property taxes went from $25,000
to $102,000. A $77,000 increase. OUCH!
It gets worse. This builder asked me to review his assessment information
for 2009. While there remains a shot at a successful challenge to 2008 if a
clerical error can be proven, no guarantees that he isn't stuck with the
extra $77,000 tax bill he paid last year.
The Devil is in the Details. And, like Faust, if you study the fine print
you can prevent unintended consequences.
Don't like the reading the fine print? Unsure what it all means? I will give
you a free quick review of your property tax assessments and
classifications. Just send me the PID numbers and locations.
Remember, you only have until April 30th,2009 to challenge your property tax
assessments and classifications.