I have a number of clients who only go into the office once a month or so just “to get the mail” and perhaps have a cup of coffee on the company dime. Underneath the stacks of state tax notices (that’s a topic for another blog), CPE course mailers (conveniently located in Phoenix in February) and Town Savers (offering $10 off of a $50 purchase at your local taco shop, excluding alcohol, of course) lies the annual property tax bill. If you are even remotely aware of the goings on in the world, you already know there’s a nice tax increase awaiting thanks to a variety of factors, including newly enacted levies, which make you wonder if your kids’ education and safe streets are really worth it. Clearly, I’m joking; potholes can do a number on a car’s suspension.
Corporate taxpayers grumble about the increase, make the payment, adjust annual accruals, move on, and tell anyone who will listen that we’ve got ourselves a property tax problem. There’s nothing we can do, right? Wrong! The answer does not lie in the tax increase; rather, it lies in the value of your property. Despite a millage rate that rivals the number of digits in π, the basic formula is simple: property tax is based on the value of your property; reduce the value of your property, reduce taxes. For many taxpayers in central Ohio or any of the 41 counties that were revalued for the 2023 tax year, for that matter, it’s likely that the tax increase was driven by an increase in the value of the underlying real estate as much as it was the new levies; 30 – 40% in some instances. The increase may be even more if you happen to own a warehouse that large e-retailers find desirable to get you your knickknacks within two hours of ordering.
Fortunately, Ohio (and every other state for that matter) provides taxpayers an opportunity to appeal the value of their property. Every three years, counties have the thankless task of trying to accurately revalue hundreds of thousands of parcels within their confines. It’s impossible to get each one exactly correct. Not all property types increase in value at the same rate, yet many of the increases seem pretty lockstep. Here is a quick snapshot of properties (among others) that could be ripe for an appeal:
- Thanks to work-from-home policies, office buildings are far below capacity, putting tenants in a position of power, which reduces rental rates, which reduces value;
- Manufacturing facilities that have expanded over time and resemble Tetris pieces are certainly not worth the construction costs that went into it;
- Warehouses with low ceiling heights are not nearly as desirable as the ones where you can stack pallets like the Tower of Babel.
Not all properties are the same, even though they may seemingly look so from a high level. So, the next time you receive a property tax bill, don’t just toss it into the accounts payable stack. Rather, take a look at the valuation details and determine if there is an opportunity to challenge the underlying value that’s driving the tax increase. Ohio’s March 31 appeal deadline is fast approaching. Don’t miss the chance to correct your valuation problem.
And hey, if you’re craving more tax talk, because who isn’t, register to attend GBQ’s upcoming SALTrends webinar, where I’ll share a more in-depth look into multistate real and personal property tax matters. See you there – albeit virtually.
