Georgia Property Tax Appeals Explained by a Professional

Posted by Daniel Jones on Oct 10, 2012 3:30:00 PM

Georgia property tax appealsLast year more people reported having difficulties in securing successful Georgia property tax appeals and assessments for their Georgia property taxes. According to a recent report in the Atlanta Journal Constitution (3/31/2012) many are unsuccessful in appealing due to a simple lack of preparation. As the saying goes, people don't plan to fail, they fail to plan.

Those well prepared and educated about the Georgia property tax appeals process are much more likely to succeed, which saves money. One of the biggest mistakes people make has to do with failing to present the appropriate comparable sales for their area. Going into the assessor's office or the Board of Equalization and claiming that your value can't be higher this year because values have been falling throughout the metropolitan area isn't good enough. Proper preparation is key. If you know a realtor, they may be willing to help you determine what the best comparables are, and what are not.

Most Atlanta counties send out the assessments in mid-April. All Georgia counties are required to send notices by July 1. All Georgia property tax appeals must be filed within 45 days of the date of assessment notice. There are no exceptions to this State rule. 

When preparing Georgia property tax appeals, it is important to be aware of how the tax assessors generated your value. For residential property, a cost approach to value in combination with a sales comparison approach is generally used. For commercial properties you are more likely to see the cost approach, the sales comparison approach and an income approach to arrive at a fair market value estimate.

For residential properties, tax assessors first use the cost approach on every property. A value is generated with the cost approach and is then compared to actual sales prices to determine if the cost approach is low or high. Finally, the sales in your neighborhood will be used by the assessors to adjust their cost values up or down in order to get as close to market value as possible.

Property tax professionals are best prepared with the expertise to do cost approaches for your property. They will also take a look at sales within your neighborhood and compare them to the assessed value of your property. When sale prices per square foot of building area are lower than your assessment per foot of building area, you have a basis for a property tax appeal.

The same is true of commercial properties. The income approach is used on properties that are rented. Most commercial properties are rented for their income producing capability. To produce an accurate income approach to value you need market rental rates, typical expense ratios and capitalization rates.

For commercial property owner/operators it is important to have a firm grasp of what the market rent is for your property. If you have a lot of turnover in your building this should be readily apparent. Even if you feel you already know what your expense ratio is, you still may not know if this is typical. The Net Operating Income (NOI) needs to be capitalized into an estimate of value. The Georgia tax assessors will be using (what they believe is) market rents, market expense ratios, and capitalization rates from the market, or more typically published sources. Capitalization rates are developed in a couple of ways, however, deriving them from sales of similar properties is actually the best way to obtain them.

These are the three basic ways to challenge the assessor's income approach:

  • Demonstrate that the market rental rate is lower than what the assessor is using and show that your property is unique in some way. 
  • Find a fact-based way to demonstrate that there will never be an expense ratio as low as what the assessor is currently using. 
  • You can also argue that the capitalization rate the assessor is using is too low.

Look online for rental rates at a site like LoopNet where you can also find sales information and capitalization rates. Property tax professionals will meet with the county to negotiate a reduction in taxable value, and attend formal hearings if the appeal cannot be settled informally. You can place your Georgia property tax appeals onto autopilot by simply contacting a professional Georgia property tax appeals expert.

Topics: Georgia tax appeals, Georgia property tax law, Georgia property tax appeals, Georgia property tax assessment, cobb county assessors, Fulton County Board of Equalization

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