Tuesday, December 29, 2009

When Should You NOT file a Property Tax Appeal?

April 22nd, 2009
When Should You NOT file a Property Tax Appeal?

A client is negotiating to sell his 40 acres. His tax assessment is more
than double the true market value. He is concerned that if he challenges the
market value it will hurt his price negotiations with his buyer. I responded
his buyer may appreciate the lower tax bill-which I have found to be true
most of the time. Problem is-his buyer is a non-profit that would be tax
exempt. What to do?

A developer purchased a large tract of land that came with a concept plan
that he doesn't like. His tax assessment is way too high. Yet his appeal
could get tangled up in platting the property with a new concept plan. What
to do?

The solution is the same for both of these. Pay the $250 filing fee and file
the 2009 petition in property tax court. Then sit on it until you work out
your other issues. My typical approach is too meet with the assessors and
seek a settlement as soon as possible. The sooner the settlement, the sooner
the tax savings. But if you don't pursue the assessor, chances are the
assessor is so overburdened they aren't going to contact you until you get a
court date. And court dates are often pushed out. You will have to pay your
inflated tax bill for 2009. But once you do get a settlement you'll get a
refund plus interest.

How does a tax appeal affect bank financing? I wouldn't be too concerned
about this because the assessed value is represents the market from 2 years
ago. Its not a value the bank or their appraiser should be looking at.
(Though I have heard rumors of appraisers just using the property tax
assessment on home mortgages when they couldn't find comps or were lazy).
Explain this to your banker-along with the benefits of lower taxes. Most
bank get this-in fact some of my clients' tax appeals are being financed by
their banks.

I also have clients who have property in future highway right of way or for
other government acquisition. . They are not yet in active negotiations for
the highway folks to buy their land. But they will be some day. Their
property is overvalued. An assessor I work with is an eminent domain
commissioner and a former appraiser with the City of Minneapolis during an
era when the city was aggressively acquiring property for redevelopment.
When a property owner sought a higher value than the city was offering, the
first thing the appraiser did was check if a property tax appeal was filed
on the property. You can't have it both ways-my property is undervalued for
government acquisition but overvalued for taxes. In these cases I typically
advise NOT to appeal property taxes.

Did I miss anything? Is there some other reason out there you haven't filed
your 2009 tax appeal? Because YOU ONLY HAVE UNTIL THE END OF THE APRIL or
you give up your right to appeal for this year.

Call me TODAY at 763-420-4757 if you still want to appeal.

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