In every sunny day, a few drops of rain must fall. When you are in the multifamily market, you will love that the rent and occupancy rates are increasing while the cap rates are decreasing. But you will not love it that with record-high prices appearing to be the norm, you will likely observe a rapid increase in Gwinnett County property tax valuations, too.
This is not surprising considering that like all tax assessors in the United States, the Gwinnett County Tax Assessor uses market data of similar property in the area for valuation purposes. Thus, the higher the sales prices, rental income, or operating income of arms-length real property transactions, the higher the property valuations for all property within the sub-category. The market-based index can work against the benefit of property owners particularly when their assets are under-performing in relation to their competitors.
The bottom line: You should always be aware of the impact of market prices on Gwinnett County property tax valuations. The trick is in deciding the amount of time, energy and effort that you should pour into being updated about these matters including their impact on your commercial property business.
Consider Your Specific Situation
You must always consider your specific situation particularly in terms of your business goals and objectives, financial assets and liabilities, and construction projects finished and in progress, among others. For example, your 5-year old multifamily dwelling units have been assessed with a 50% higher valuation for the current year than the previous year. You will likely rate it as a more pressing concern for several reasons.
Your property may be under-performing in comparison with your competitors, as is the case with an older building with fewer amenities versus a newer building with better facilities with more tenants being attracted to it. Your property’s increased appraisal value may also have been affected by the record-high prices paid for new projects in the area. As a landlord that passes property taxes onto your tenants you have to stay competitive in this way also. Your tenant pass-through charges are weighed by potential tenants.
In this case, you have valid reason to file a Gwinnett County property tax appeal to contest the over-assessment.
You may not be worried about over-assessments when the multifamily units are still in progress. Your immediate concerns will be more on construction schedules and financing sources, not on the assessment values on the unfinished building. You will also be more concerned about taking advantage of property tax incentives.
Consider Tax Planning
If you are in the commercial property business, you should always have an experience property tax consultant on call, so to speak. You want to ensure that all of your decisions are proactive in terms of assessments, appraisals, and taxes. Otherwise, you may just find yourself paying property taxes on non-performing assets, which means longer periods of being in the red.
Don’t make the mistake of underestimating property valuations and taxes as these can adversely and significantly affect your returns on investment. Always take a proactive approach in these matters especially when it comes to the way that the Gwinnett County property tax authorities assess your property.
