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Commercial Real Estate Owners Have a Limited Time to Appeal their 2021 Property Tax Assessments by John G. Ebenger, CPA

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Posted on July 26, 2021 by John Ebenger

Commercial property owners in Florida will soon receive Truth in Millage (TRIM) notices indicating the county’s appraised market value of their real estate and the estimated property taxes they can expect to pay for the year. Although it is not uncommon for landlords and developers to ignore these estimates in anticipation of receiving a final tax bill in the Fall, doing so can be extremely costly, especially in light of 2020’s unprecedented economic environment. Instead, property owners should take the time to review their tax assessments and understand their rights with regard to filing appeals.

The Challenges with Commercial Property Appraisals

Property taxes are typically one of the largest line-item expenses for commercial real estate owners, and a surprisingly high tax bill can severely restrict cash flow, increase occupancy costs and diminish profits. The actual tax liabilities presented in a TRIM notice is dependent on the county property appraiser’s assessment of the real estate’s approximate fair market value on January 1. These valuations are based on such factors as the property size, location and physical characteristics as well as comparable property sales. However, because much of this information is culled from public records rather than individual site visits, it is possible that the data appraisers use to determine taxable value is incomplete or incorrect. Errors can and do occur. Moreover, this method of appraisal may not reflect the actual utilization of a property or its ability to generate profits, which, most would argue, is critical for determining fair market value, or the price a potential buyer is willing to pay.

With 2020’s government-mandated business closures, occupancy restrictions and shelter-at-home directives in the wake of the COVID-19 pandemic, there were significant interruptions to normal business operations and utilization of commercial real estate. The weight of these government orders and prolonged decline in economic activity made it difficult for retailers, restauranteurs, and other tenants to remain open and pay rent. In fact, it is safe to say that no business owner had complete control over the use of their commercial property during all the days of the past year. Additional restrictions on property owners prevented them from processing evictions and generating profits, which, under Florida statutes, may be considered a breach of property owner’s rights.

The Solutions

Florida law does allow property owners to appeal the assessed value of their real estate and the related tax liabilities they owe. However, the window of opportunity to file a petition with the clerk of county courts or value adjustment board is time sensitive and predicated on the date the property appraiser mails TRIM notices, which typically begins in August. More specifically, taxpayers have 25 days from the date of a TRIM notice mailing to file a petition challenging the county’s valuation of their property.

Failure to meet this deadline will automatically revoke taxpayers’ rights to file an appeal. Consequently, property owners must carefully review TRIM notices as soon as possible to ensure they are not over-assessed and, more specially for this year, that the assessments they receive reflect the impact the pandemic and government restrictions may have had on their property value.

The advisors and CPAs with Berkowitz Pollack Brant have more than 40 years of experience helping commercial real estate developers, investors and property owners maintain tax efficiency and maximize profits. This includes working with clients and others to review and appeal TRIM notices to ensure property taxes reflect the true and most precise market value.

About the Author: John G. Ebenger, CPA, is a director in the Real Estate Tax Services practice of Berkowitz Pollack Brant Advisors + CPAs. He works with developers, landholders, investment funds and other real estate professionals as well as high-net-worth entrepreneurs with complex holdings. He can be reached at the CPA firm’s Boca Raton, Fla., office at (561) 361-2000 or info@bpbcpa.com.