Easing the Taxing Costs of Property Ownership

Owners of real estate, whether residential or commercial are taxed for buying their property, selling their property, and even for simply owning their property. Each year around November, property owners receive a bill for ad valorem taxes on their real property[1]. This bill is a combined tax assessment made by the State of Georgia, the County where the property is located, and in some instances the local municipality as well.

Unlike income taxes which are based upon verifiable data, ad valorem property taxes are often based upon a property valuation opinion made by a panel of taxpayers summoned to serve on the County Board of Tax Assessors. Often times, these opinions are based upon generalized assessments of the type of property being taxed and the general location of the property, without knowledge or consideration of the particular characteristics and condition of the property.  After all, local governments simply do not have the resources to make individualized assessments of each and every property in the County before each tax assessment every year.  As such, it is up to the taxpayer to ensure that his/her properties are valued and taxed properly.  Otherwise, the taxpayer could risk overpaying the government thousands if not tens of thousands of dollars each year.

WHAT IS FAIR MARKET VALUE?

The Georgia Department of Revenue has established guidelines to assist County Tax Assessors with determining property values. Georgia statute defines a property’s fair market value as the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm’s length, bona fide sale. The best indicator of fair market value is the sale amount for a recent arm’s length, bona fide sale of the taxpayer’s property.

However, where no recent sale occurs, there are three alternate general methods by which to determine a property’s fair market value. The first method is the Sales Comparison Method in which recent sales of similar properties in similar locales are used as indicators of the fair market value of the taxpayer’s property, and adjustments are made depending on apparent differences.  For income producing properties such as shopping centers, office buildings, warehouses, and hotels, a property’s value is the potential income to be generated by the property which is estimated by projecting a future income stream that reflects typical management and current market conditions. A third and less used method is determining the cost of replacing the property as of that tax year. These three methods involve more complex factors as well but illustrate how differences of opinion can arise from the valuation of property.

WHEN TO DISPUTE A TAX ASSESSMENT

Owners of real property in Georgia are required to file a real property tax return with their local Tax Assessors office by April 1[2], declaring what they believe the fair market value to be.  The local Board of Tax Assessors then makes its own determination of value and in the Spring each year, mails each taxpayer an official tax assessment, notifying the taxpayer of the fair market value the County placed on the property, and the assessed value of the property. The assessed value is 40% of the fair market value of the property and is the value that is taxed by the County. Property owners should consider disputing a tax assessment when the County’s fair market value determination exceeds what the taxpayer believes the fair market value to be.

As a general rule, the savings resulting from a successful tax appeal can be estimated at $1,500.00 for every decrease of $100,000.00 from the County’s opinion of the property’s fair market value. For example, one of our firm’s clients received a tax bill for its commercial property valued at $8,301,000.00.  After an appeal, our firm was able to assist in having the valuation lowered to $5,900,000.00, saving our client more than $360,000.00 for that tax year alone. While we cannot guarantee this type of recovery, tax appeals can be a very effective means by which to lower the costs of owning real property.

A taxpayer has 30 days from the mailing of his/her assessment to dispute the assessment by filing a notice of appeal with the local Tax Assessors Office. Prompt action is required to avoid a waiver of appeal rights. It’s in your best interest to work with a commercial real estate attorney.

HOW TO DISPUTE A VALUATION ASSESSMENT

Every property owner has the right to dispute State and local government real property ad valorem taxes by mailing or delivering in person a simple Notice of Appeal to the local County Tax Assessor’s Office within 30 days from the County’s mailing of current year’s tax assessment notice. Taxpayers should keep evidence of their mailing or delivery of the notice to better protect their appeal rights. Using certified mail or gaining a time-stamped copy of your filing from the Assessor’s office upon personal delivery are both good methods of preserving evidence of timely filing. There are three grounds upon which a taxpayer may base its dispute (1) fair market value (2) uniformity, and (3) taxability. The grounds for appeal must be expressly stated in the Notice of Appeal or are considered waived. In an abundance of caution, taxpayers should preserve all three grounds for appeal.

A. Board of Assessors Reevaluation of Tax Assessment – Upon the filing of a Notice of Appeal, the County Board of Tax Assessors will review the taxpayer’s dispute and reevaluate the fair market value of the taxpayer’s property. If the Board of Assessors makes any change in the taxpayer’s property tax assessment, it will provide notice of such to the taxpayer by certified mail. The taxpayer then has 30 days to dispute the reassessment by filing a Notice of Appeal of the reassessment with the County Board of Tax Assessors. The taxpayer’s appeal is then sent to the Board of Equalization which will schedule a hearing date for the taxpayer and County Tax Assessor’s Office.[3]

B. Board of Equalization – If the County Board of Assessors does not resolve the taxpayer’s tax appeal to the taxpayer’s satisfaction, a hearing date will be scheduled for the County Board of Equalization to consider the County’s tax assessment and the taxpayer’s concerns, or if properly requested the taxpayer may have the alternative of forwarding the dispute to arbitration or having the matter heard by a neutral hearing officer. The Board of Equalization consists of three (3) members selected by means similar to being summoned for jury duty. The County Tax Assessors office will have the opportunity to argue why it believes the tax assessment to be correct, and the taxpayer will have his/her opportunity to argue otherwise.  The Board of Equalization will often mail the taxpayer its decision the same day. If the Board of Equalization did not resolve the appeal to the taxpayer’s satisfaction, the taxpayer may then continue the appeal by filing a Notice of Appeal to Superior Court. As with prior appeal notices, the Notice of Appeal to Superior Court is filed with the County Tax Assessor’s Office and must state all grounds upon which the appeal will be based (1) fair market value, (2) uniformity, and/or (3) taxability.  The taxpayer has 30 days from the mailing of the Board of Assessors’ decision to file its Notice of Appeal to Superior Court with the County Tax Assessor’s Office.

C. Superior Court – Upon the filing of a Notice of Appeal to Superior Court, the County Tax Assessor’s Office will certify (file) the appeal with the Superior Court and send the Superior Court all documents presented to the Board of Equalization. The taxpayer will then receive a Civil Action File number and the action will proceed much like an ordinary lawsuit. While individual taxpayers may represent themselves in Superior Court, the law requires that businesses and other entities be represented by legal counsel.

Our commercial real estate lawyers at Hecht Walker, P.C. have provided valuable and effective services for numerous companies looking to gain relief from their real property tax bills. We have been successful in resolving tax appeals for our clients at the Board of Equalization level and in litigation. In the event you are interested in gaining more information about how we might be able to assist you in seeking real estate property tax relief, please do not hesitate to contact us at 404-348-4881.

This article is not intended to replace the need to contact legal counsel in the event you would like to preserve or appeal your tax appeal rights. This article is based upon applicable laws as of the date above, and contains general information that may change depending on particular circumstances of certain matters.  Our firm advises cities, counties, authorities, and real property owners regarding land use and property taxation issues as a part of our practice. Please note that every situation is different and contains unique facts that may allow for a successful claim or defense or not. We always advise that you speak to legal counsel directly in order to learn how to preserve and protect your tax appeal rights.


[1] Ad valorem taxes are taxes on property owned by the taxpayer which are calculated according to the value placed on each item of property.  The State and local governments tax both real property (), and personal property.

[2] Taxpayers should check with their own County Tax Assessor’s Office to confirm the deadline for filing property tax returns in that particular county, as deadlines could vary from county to county.

[3] In lieu of a Board of Equalization hearing, taxpayers have the statutory right to request that their appeal be decided through arbitration or by a neutral special hearing officer for certain properties valued at more than $1,000,000.00.  O.C.G.A. § 48-5-311(e).

Attorney Jon Jordan Attorney Jon Jordan’s legal practice areas are commercial disputes, property tax appeals and government issues. Prior to becoming an attorney, Jon worked for Senator Arlen Specter, serving as Deputy Press Secretary, Legislative Aide for Foreign Affairs and Defense issues, and as Special Assistant to the Senator.

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