Property Taxes: Speak Now or Forever Hold your Peace
Beth Daniels and Randy Mora
As Ben Franklin said, “there are two things in life that are certain: death and taxes”. Our colleagues in the corporate/ tax department can help you plan for the eventuality of death. What we would like to do is to show you how to be proactive to minimize your property tax liability.
While summer is a more relaxing time, it is also the best time to take steps to save on your property taxes. Such taxes in Florida are ad valorem taxes– that is they are calculated based on what the county property appraiser estimates your property to be worth multiplied by a rate set by the county commission. Thus, for the owner or manager of a large commercial property (or even an expensive home), these taxes are often one of the largest yearly expenses.
Florida is one of the few states that reassesses each year and the assessment is supposed to mirror the true market value of the property as of January 1 of each year. So, an attentive owner really can help reduce expenses if they plan ahead and react quickly to tax notices and other opportunities that arise during the annual assessment process. If you do not like the tax RATE, it is set by the county commission, so your remedy is within the political process. If you think the ASSESSED VALUE is too high, that is something you can change by negotiation with the local assessor or through two different channels of appeal.
We recommend that each year in May to August, owners/ managers look at what their parcels’ assessed values were for the prior year. If you think your valuation was too high, consider meeting with individual county staff appraisers. By July 1 each year, assessors must report preliminary values to Fl DOR. So, a preliminary estimate should be available to you. Most county appraisers appreciate having more detailed information on the properties they are assessing. By having a proactive dialog with the county staff appraisers you will gain advance knowledge of the upcoming assessment and be able to budget and plan better. You will also have a chance to share data that could help reduce assessments and, consequently, the tax burden. For example, perhaps the county is unaware of interior damage to the property, or dramatic shifts in rental rates, income or expense data. These are just a few examples of information that could help you lower an assessment. Sometimes an owner is unaware of errors made in assessing their property such as mis-measurement of leasable area or an incorrect zoning category. If an owner does not know the county’s computerized data on a property, the opportunity to fix those type errors is lost. CAVEAT: if it appears your property has been assessed at below market value, it is probably best to just to keep quiet.
Each August, the County Property Appraiser will mail the Notice of Proposed Property Tax to all property owners. This form is commonly called the TRIM (Truth in Millage) Notice. The importance of the TRIM notice cannot be understated. The notice says in bold print “This is Not a Tax Bill”, so people often mistakenly fail to examine it closely. No one likes to think about taxes, so it is easy to ignore this important paper. It should be read immediately and carefully; being proactive remains key. The TRIM Notice shows the assessed value that has been assigned to a given parcel and it also discloses any exemptions or capped values applied to the property. You should meticulously review it to determine if anything is wrong about the value, exemptions or caps applied and take prompt action to meet with the county staff or to file an appeal.
As might be expected, there are rigid deadlines for taking action if you believe your property has been assessed too high or an exemption improperly denied. If you choose to appeal the value through the administrative stage you must file a petition with the Value Adjustment Board (“VAB”) in the county where the property is located within 25 days of the TRIM Notice. This 25-day deadline differs slightly from county to county. You can easily determine this deadline by checking the bottom of the TRIM Notice where it is shown in very small print. Starting in late September (later in many larger counties), the VAB clerk will give notice and hold hearings on VAB petitions.
For those that didn’t act quickly enough to participate in the simpler VAB process or who are dissatisfied with the results of the VAB process, all is not lost. Owners still have an option of appealing in a circuit court lawsuit. This process has its own set of deadlines and requirements and again they are rigid and short. Parties generally have 60 days from when a final VAB decision is reached or after certification of the county tax roll to file a circuit court action. The certification dates vary between counties, but usually occur in October. This often leaves owners either rushing to the courthouse during an already too busy December or throwing their hands up in despair. In almost every circumstance, if you miss the deadlines, the property is saddled with the erroneous and excessive assessment for another entire year before the next chance to seek correction arises.
Formal appeals can be expensive and complicated. Much of this procedural rigmarole can be avoided by being alert right now. We encourage you to think about those assessments now, and reach out to your county’s staff appraisers so you avoid incurring court costs later. Regardless, we at Johnson Pope are here to guide you through the process and help you save on this unavoidable but controllable tax burden.