We have the experience in retail valuation to review a portfolio of hundreds of properties spanning a state or the nation, and to identify which properties are likely or clearly over-assessed by taxing authorities. We then are able to request the specific documentation required for a definitive determination of value.
We also are able to research a taxpayer’s portfolio of parcels, which is sometimes extensive, and to identify property tax appeal deadlines and requirements. We then can efficiently pursue revaluation to fair current assessments. Subsequent years can be updated and tracked.
Following property transfers in California, new assessments are re-established. Appeals of these values set a base year maximum for future years, subject to annual indexing. For this reason, large scale transfers of portfolios and multiple properties trigger valuable tax appeals which can only be done once. These appeals warrant extra care in both the execution and selection of the agent.
More important than a slight price differential between professionals is who is most qualified, most experienced, best able to produce credible analysis, and most likely to prevail. Property tax appeals are valuation matters and valuation credibility is key.
We are able to coordinate these appeals in California and other states.
The rising trend of online sales have taken its toll on some retail occupancies and rents, also increasing risk for some retail assets. The PwC Real Estate Investor Survey published in late 2022 noted an upward shift in capitalization rates in the National Regional Mall Market to reflect increased risk which may be applicable to some properties. The survey further discussed the retail market including the following:
“Looking ahead over the next three years, the U.S. retail sector is projected to improve, even if it may not be enough to move many metros out of recession.”
According to publications by advisor Green Street, “Shopping mall prices have been hit the hardest since the recent peak.” Among factors affecting shifts in property values are the rise in interest rates following the hikes in Federal Funds rates, as well as vacancy trends. Most retail property segments are at risk in 2023 of rising average capitalization rates in the market, resulting from rising Federal Funds rates. Further increases in these rates are widely anticipated to continue further, as of late 2022, according to most surveys of investors and economists. In addition, other factors which increase risk on a property specific basis as well as a local market basis. These risk factors include higher vacancy in the subject or the market, declining consumer spending power, and weakening economic conditions.
Retail property owners in California face challenges when it comes to property taxes. High assessments can impact their business’s profitability. However, there are options available to appeal and potentially lower retail property tax assessments. Below we explore the process of appealing retail property taxes in California, discuss the importance of county tax collectors and assessors in the retail context, and provide information to help retail property owners navigate the system. For professional assistance, contact Western Property Advisors, an advisor with experience in assisting retail property owners with their tax appeals.
County tax collectors and assessors play a key role in the assessment and collection of property taxes for retail properties in California. These officials are responsible for determining property values, applying tax rates, collecting taxes, and addressing appeals specific to retail properties. Each county has its own tax collector and assessor’s office, including Alameda County Tax Collector, Ventura County Tax Collector, Fresno County Tax Collector, Riverside Tax Collector, Los Angeles County Tax Assessor, Butte County Tax Collector, Kern County Tax Assessor, San Bernardino County Tax Assessor, Santa Clara County Tax Assessor, and San Francisco County Tax Collector. Their expertise and processes are tailored to handle retail property assessments.
Appealing retail property taxes in California requires following a specific process. Here is a step-by-step guide to help you get started:
1. Review your retail property assessment: Obtain a copy of your retail property tax assessment from your county tax assessor’s office. Understand the assessed value and any applicable exemptions specific to retail properties.
2. Determine grounds for appeal: Identify valid reasons for appealing your retail property taxes, such as incorrect valuation based on market trends, errors in property characteristics specific to retail properties, or unfair assessments compared to similar retail properties.
3. Gather supporting documentation: Collect evidence to support your appeal, such as recent appraisals of retail properties, comparable sales data for similar retail properties, and any relevant information about retail market conditions that affect property values.
4. File an appeal: Submit the necessary appeal form to your county tax assessor’s office within the specified timeframe. Include your supporting documentation and clearly state your reasons for the appeal, emphasizing how retail-specific factors impact your property’s value.
5. Attend the assessment hearing: Prepare for the assessment hearing where you will present your case to the local assessment appeals board or assessment appeals panel. Provide your evidence and articulate your arguments effectively, highlighting retail-specific considerations.
6. Await the decision: The appeals board will review your case and issue a decision. If the decision is favorable, your retail property taxes may be adjusted accordingly. If the decision is not in your favor, further legal options may be available.
Protesting retail property taxes allows you to challenge the assessed value or tax rate applied to your retail property. Consider the following points:
– Grounds for protest: Understand valid grounds for protesting retail property taxes, such as improper valuation methods for retail properties, errors in retail property data, lack of uniformity in assessments of retail properties in some states, or violations specific to retail properties.
– Building a strong case: Gather evidence to support your protest, including recent appraisals of retail properties, sales data for similar retail properties, and discrepancies in assessments of comparable retail properties.
– Presenting your case: Prepare a well-organized argument and present it during the assessment hearing. Clearly articulate the reasons for your protest and provide compelling evidence to support your claims.
While appealing and protesting retail property taxes are effective methods, there are additional ways to potentially lower your retail property taxes in California:
1. Actively manage assessments: Stay informed about retail property tax assessment practices in your county. Monitor changes in retail property values, ensure accurate representation of retail-specific characteristics.
2. Seek professional assistance: Consider consulting with retail property tax experts, such as Western Property Advisors. Their specialized knowledge and experience in retail property tax appeals can greatly improve your chances of success.
Property tax reassessment can result in higher tax obligations for retail property owners. Follow these strategies to minimize the risk of reassessment:
1. Understand reassessment triggers: Familiarize yourself with events or property transfers that can trigger reassessment, such as changes in ownership, substantial retail property improvements, or modifications in legal entities related to retail properties.
2. Consult with professionals: Seek guidance from real estate attorneys, tax consultants, or property appraisers who specialize in retail properties. They can help structure transactions or ownership changes to minimize the likelihood of reassessment.
3. Plan strategically: Evaluate the potential impact on retail property taxes and reassessment when considering property improvements or ownership transfers. Timing and structuring transactions appropriately can help mitigate the risk.
Successfully appealing retail property taxes in California requires a solid understanding of the process, awareness of retail-specific factors, and careful preparation. By following the steps outlined in this article and considering professional assistance from Western Property Advisors, retail property owners can navigate the complex landscape of retail property tax appeals more effectively. Adjustments to property tax assessments can contribute to increased profitability and long-term success for retail businesses in California.
Director, Valuation Services