Are your property taxes too high? You may be able to do something about it.
The federal government recently limited the amount taxpayers can deduct for state and local taxes, including property taxes. Now, more than ever, it is important to monitor your real estate assessment and act to reduce your taxes if your property is over-assessed.
In Connecticut, municipalities revalue real estate at least once every five years for tax purposes. Bridgeport, Norwalk, Darien, New Canaan and Weston just completed theirs and the new valuations are being shared with taxpayers over the coming months. Municipalities typically value properties using a method called “mass appraisal.” This approach is not 100 percent accurate, but is used because it is cost-efficient. If your property valuation appears high, now is the time to take action as Connecticut provides a very narrow window of time for a challenge.
Many municipalities provide taxpayers with notice of the proposed valuation sometime between now and year-end and allow taxpayers to meet informally with the assessor or one of the municipality’s valuation consultants to present reasons why the valuation appears inflated. If a taxpayer is unsatisfied with the results of the informal meeting, beginning in January, the taxpayer can file a formal appeal with the municipality’s board of assessment appeals.
The deadline for filing an appeal generally is Feb. 20, but can be extended to March 20 at the municipality’s request. For higher-valued residential and most commercial properties, the municipality can refuse a hearing with the BAA and summarily deny the appeal. When a hearing is granted, it is uncommon for a BAA to make any significant change to the valuation no matter how compelling the taxpayer’s arguments.
If unsatisfied with that outcome, the taxpayer may appeal to the Superior Court. It must be filed within two months of the BAA decision. Most of these cases resolve without a trial in mediation or settlement conferences.
Taxpayers often like to look at the assessment amount of a neighboring property and argue that their assessment should mirror neighbors. While this anecdotal information can complement an appraiser’s testimony, the ultimate question will be: “Did the municipality accurately value your property?” Looking at the assessment of neighboring or similar properties is usually not worth the effort. However, some information can be very useful:
• Was the property recently sold or listed for sale? If the property is listed for sale well above the value you seek from the municipality, this is problematic.
• Was the property recently financed or refinanced? If so, an appraisal will exist concerning the refinance. If that appraisal is much higher than your view of your property’s current value, there better be a good explanation as to why.
• Is the municipality’s information (square footage, acreage, etc.) accurate?
• Have you done any recent renovations or construction on the property such that there will be building permits with estimated construction costs filed with the municipality?
If the property is income-producing:
• Have you timely submitted income and expense statements with the municipality?
• Does the property have cell tower income? Parking fee income? Tenant reimbursements? Early lease termination payments?
• Is there any recent leasing activity? Is space listed for lease currently? The recent leasing activity or listing may be used as evidence as to what all similar space on the property should lease for.
• Are your rents and expenses in line with the market? If not, why?
If, after reviewing this information, it is believed that a tax appeal is warranted, your attorney should engage a real estate appraiser to either perform a written appraisal report or, at a minimum, review all the relevant documentation and perform a rough initial analysis.
Retaining a competent appraiser familiar with the tax appeal process is important. The appraiser will be the most important witness in the case and likely the only witness to make any difference in its outcome.
The tax appeal process is relatively straightforward and often not particularly complicated. However, tight deadlines and the infrequency of revaluations make it extremely important to analyze whether an appeal should be brought between November and January of any revaluation year.
Adam J. Blank is a partner in the Stamford law firm Wofsey, Rosen, Kweskin & Kuriansky, LLP. His practice focuses on tax appeals throughout the state, representing municipalities and commercial and high-end residential property owners. He can be reached at 203-327-2300 or email@example.com.