You should have received your annual assessment notice issued by the Gwinnett County Tax Assessor in early April. You will be deciding whether to accept the property valuation reflected on it – and pop an antacid while you’re at it – or challenge the appraised value by filing a formal appeal. You have to keep in mind, too, that taxes are a necessary evil since these are the government’s primary fund sources for social services, education, and infrastructure, among other government functions.
The bottom line: You have to pay your property taxes but you should also approach the assessed value of your real property with a healthy dose of skepticism coupled with a vigilant eye for the common errors assessors make. You are, in effect, ensuring that you are paying your fair share of the local tax burden – no more, no less.
Download the The Cost Approach eBook
Determine the Real Market Value First
Your first step is to determine that the Gwinnett County Tax Assessor made the correct assessment of your real property’s real market value. Your tax advisor will usually look at the possibility that the property’s leased fee value and/or the going-concern value were used in the assessment. If so, you can challenge the assessed value as these are inappropriate criteria.
You should look at the purchase of real estate in two ways. First, the purchase price for a fully-leased commercial building usually reflects its leasedfee value. The sales price can reflect a greater value than it normally would be ifthe property was vacant, or if the contract rents are higher than market rents. The purchaser, after all, is already getting immediate returns on investment from the existing rental fees.
But if the property’s sale price is recorded by the Gwinnett County Tax Assessor as its taxable value, you as the owner can be overcharged with property taxes. Why? Your property has an assessed value made without the proper evaluation of lease-up costs, market rents, market vacancy, and market expense ratios.
Second, the purchase may include compensation for an in-place workforce, business goodwill, and effective management, among other intangible assets not usually taxable in most areas. You have to ensure that the tax assessor excluded these intangibles from the sales price since only the tangible real property should be taxed.
Look for Mass Market Appraisal Errors
In a multi-property transaction, you have to look into the errors that come with a mass appraisal of the entire portfolio. You should have each real property analyzed in an in-depth manner and as an individual asset. The sale price of each property within the portfolio sale should be recorded on the Georgia property transfer form PT-61.
Otherwise, the entire portfolio can be subjected to over-assessment and, thus, you will be paying more than your fair share of the tax burden. For example, a piece of property may have governmental restrictions limiting its potential for commercial development or it may have environmental liability.
You should also be on the lookout for other errors made by the Gwinnett County Tax Assessor, such as construction costs that do not add value to the property. Your awareness of these pitfalls will be your opportunity to reduce your annual property tax bill while still being a law-abiding citizen of your county.
