It's springtime in Atlanta! Oh wait, it's in the 60s with thunderstorms and a tornado watch and it's only January 30! Such is life in the capital of the new South. If you don't like the weather just wait a little while. There will be a similar tornado watch this spring as the tax assessors begin to send out tax assessment notices to every real property owner in the state of Georgia.
Last year the Cobb County Tax Assessor created quite a storm when they sent out huge increases on commercial properties. Many of the unsuspecting commercial property owners were dumbfounded at the taxable value increases they saw, considering they were still struggling to keep tenants in their buildings and competing with other struggling property owners for new tenants. Even though some of their values were, honestly, a little low, they couldn't believe that with the same net operating income as the previous year their taxable value could be 50% to 100% higher.
The Cobb County Tax Assessor personnel argued, rightly so, that their hands had been tied for the previous three years. The Georgia General Assembly had passed sweeping property tax reform legislation that included a three year moratorium on tax assessment increases. 2012 was the first year post moratorium and the tax assessor personnel saw it as an opportunity to do what they hadn’t been able to do for three years – raise values. In Board of Equalization hearings they argued that property owners and their agents had been appealing every year and getting tax assessment reductions each of the past three years, while they could not raise any values. It was their turn.
I'm not certain that the moratorium on assessment increases did anyone real good. I guess they saw the tax assessors digging in their heels and not reducing values when there was blood in the streets. However, this has made some tax assessors too eager to have their turn at changing (increasing) values. The moratorium made Georgia like South Carolina, temporarily. In South Carolina the counties only reappraise once every four years, so the changes in value can be pretty shocking.
You can expect more of the same in 2013. Capitalization rates on commercial real estate have continued their downward slide since their recessionary peak. Lower cap rates mean higher values, all other things being equal. All other things might not be equal at your commercial property. Perhaps your vacancy rate is higher; your market rent lower, or operating expenses higher. This may negate or overwhelm any decrease in capitalization rate. Estimate your property value using your actual 2012 profit and loss information, or have us do it, and see how it compares to the 2013 tax assessment when it arrives this spring.
On the residential side of real estate all is well, right? In November the Case-Shiller home price index was up 7.6% over November 2011. That’s encouraging but I know there are pockets of strength and pockets of weakness. Expect the Cobb County Tax Assessor to increase residential values wherever they think they have enough data to support an increase. Often this means ignoring the foreclosures and short sales and focusing on the few sales that are not “distressed.” The Georgia General Assembly also made it mandatory that the tax assessors consider these distressed sales when finalizing their values. I think this portion of the new tax law fell on deaf assessor ears.
When the spring storms are approaching check back with Fair Assessments. We will continue to add content to this website that will educate taxpayers and give them resources they can use to analyze their tax assessments and prepare a property tax appeal. Some might ask why a company in the business of property tax appeals would be helping others do it. I say we cannot help everyone; there is too much real estate out there. Check back often, or subscribe to our blog. Thanks!
