COVER STORY, MAY 2012

TO APPEAL OR NOT APPEAL
Tax consultants pave way to reduce exposure for property owners.
By Rick Kurz and Jeff Kurz

Property tax season is upon us — to the dismay of many. As property owners receive their 2012 real estate property tax Notices of Appraised Value, many may be surprised and challenged with how to deal with possibly higher-than-expected appraised values — and the consequent taxes they owe.

There are ultimately two decisions a property owner can make this May, which marks the beginning of the property tax appeal cycle in Texas. They can either stay silent and

satisfied, choosing to accept the newly appraised value of his or her property and pay the amount of taxes owed. Or, appeal the value and attempt to reduce his or her property’s tax liability not only for the owner’s sake, but also for the tenants’ sake. While this decision seems black and white, in many situations, property owners may not even know that there is an opportunity to appeal.

Most retail leases are structured in such a way that property taxes are passed on to the tenants of the building. Just as tenants are expected to keep their landlords happy by being timely on their rental payments, landlords must also strive to keep their tenants satisfied. One way a property owner can do this is by making sure the tenants’ property tax exposure is minimized. Property taxes are a large expense year after year, so any increase in taxes can hit tenants hard and even push them to question their ability to stay in their current lease.

By having lower property taxes, one property can become much more appealing than another. As the market shifts, a property owner has to stay on top of what the property value should be, not what it is currently assessed for.

Each calendar year, property taxes are a moving target and an expense that cannot be ignored or avoided. However, it is an expense that an owner can at least try to reduce by taking the first step: Doing the research to prepare a case and file an appeal, or hiring a tax consultant to do the work. Whereas a property owner has a micro view of evaluating a single, specific property’s value, consultants have a macro view of the whole market. As a result, consultants have the knowledge and expertise to compare each individual property to all comparable properties on the tax roll in the same market area. Looking at the overall market allows consultants to narrow in on what the value of a specific property should be based on all like properties. So, while a property owner may assume his property is accurately assessed, a consultant may view it in a different light — perceiving it as over (or under) assessed and finding opportunities to reduce the owner’s tax liability substantially. This does not mean that an owner must appeal the assessed values on his or her properties every year, but does mean that he or she should at least review and consider it every year.

Hiring a licensed tax consultant not only opens the door to discovering new ways to protest and reduce an owner’s commercial real estate tax liabilities, it can also save an owner a tremendous amount of time, energy and resources to dedicate to assemble a strong — and valid — case for appeal. In truth, there are advantages for all parties involved to represent and evaluate the same properties year over year. As the consultant develops familiarity and compiles historical data over time by assessing the same property year after year, the owner benefits by seeing his or her tax liabilities decline time and again, while the appraiser also grows a history with the account and will consistently be able to expect the level of expertise and knowledge that consultants provide.

No one wants to pay more than their fair share of taxes. Assessing and appealing property taxes is just one way to make sure to save money. The option to appeal the assessed value of a property is available to every property owner, every year. Why not look into it? The consideration has to be there at the very least — every year.

— Rick and Jeff Kurz are co-managing partners of Kurz Group, Inc. Celebrating its 25th year in 2012, Kurz Group is a Dallas-based national property tax consulting firm specializing in commercial real estate and business personal property (BPP).

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