Property taxes are the largest state and local tax paid by businesses in the US and comprise a substantial portion of total operating costs for landlords. You can proactively manage these costs and substantially reduce your tax liability for future years by filing an assessment appeal.
To successfully challenge assessments, you need to adhere to document filing requirements, appeal deadlines and procedures. These vary by state, and sometimes by county or municipality. You need to be able to assemble compelling data in support of your suggested value, and strategically present your analysis and arguments to assessment authorities or tribunals.
Why should you file an appeal?
An appeal is the only way you can reduce the amount of realty tax you will pay for the coming year. By the time you receive your final tax bill, it is too late.
An assessment may be based on incorrect information, as the assessor may have inaccurately estimated the market value or may have assessed your property at a higher rate than similar properties. In some jurisdictions, a different tax rate may apply depending on how the property is used, and you can appeal if the classification is incorrect.
Assessments are prepared using mass appraisal techniques – methods which enable assessors to value a large number of properties in a short period of time. They usually reflect overall market trends, but may not capture the specific circumstances of individual properties. Your property may be showing its age, be in poor condition or it may have been damaged. It may have special features that are no longer valued in the marketplace or it may be suffering from a market oversupply or a decline in demand.
As we enter the fourth year of the global pandemic, your property value may have declined. Many commercial properties, including office, hospitality, and some retail, have not recovered from drops in value - or are beginning to feel the effects of the pandemic as leases come up for renewal. Values are particularly difficult to forecast in a volatile market, and assessors generally have a reputation for being overly optimistic when estimating values for tax purposes.
How can you file an appeal?
The assessment and appeal process may vary by state, county or city. An overview of the assessment cycle and levels of appeal is outlined below and appeal deadlines are summarized in the following section.
Maryland
Maryland has a triennial assessment cycle, and one-third of properties are reassessed each year. These are the in-cycle properties, and owners receive notice of the new assessment. The appeal deadline is 45 days from the mailing date and for the 2023 taxation year, this deadline is February 10.
For properties in the 2nd and 3rd year of the triennial cycle (out-of-cycle properties), no notices are sent. To have the opportunity to change the assessed value of an out-of-cycle property, you need to file an appeal by December 31st of the preceding year. For example, to challenge the assessed value for an out-of-cycle property for 2024, you will need to file an appeal by December 31st, 2023.
The ideal time to appeal your assessment is when your property receives its notice of reassessment, but there are significant benefits to appealing out-of-cycle assessments as well. Changes in the assessed value are phased in over the triennial cycle. A successful appeal not only reduces your assessment and tax liability during the current cycle, but it will also set a lower starting point for the phase-in of future assessments. This means that any savings achieved will impact your tax payments for several years, as savings continue for two years past the end of the current assessment cycle.
Virginia
Northern Virginia jurisdictions revalue properties on an annual basis. The process is managed at the local (county or city) level. Each jurisdiction has two levels of appeal. You can either appeal to the second level directly or file a first appeal with the local assessment authority and proceed to the second level - Board of Equalization (BOE) if you receive an unsatisfactory decision from the first level. There are different appeal deadlines for each level in each county and/or city.
The District of Columbia (DC)
The District of Columbia also assesses annually. Assessments are based on market value as of January 1st of the current year and income from the two previous years.
On March 1st, 2023, notices will be issued for the 2024 taxation year. To challenge the assessed value for 2024, you must request an administrative review on or before April 1st, 2023. The administrative review is the first level of appeal. Hearings take place in May and June and notices of decision are received in September.
If you receive an unsatisfactory decision at the first level, you may appeal to the second level. You have 45 days from the dated listed on your administrative appeal decision notice to appeal to the Real Property Appeals Commission (RPTAC). If you don’t receive a decision from the first level of appeal, you must file your appeal to the RPTAC by September 30th. Hearings for the 2nd level take place between October and January and decisions are mailed in February. If you do not receive a satisfactory decision from the second level of appeal, you can take your case to the DC Superior Court. The deadline for appealing RPTAC decisions for the 2023 taxation year is September 30th, 2023.
If you purchased a property after the notices of assessment are mailed on March 1st, you have 60 days to appeal to RPTAC. If you don’t obtain a satisfactory outcome at the RPTAC, you can file to DC Superior Court before September 30.
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When can you file an appeal?
Appeals can be filed each year, whether the assessment has changed or not. The deadline for appeal is generally tied to the date your assessment notice is received. You should always consult your assessment notice to verify the deadline for appeal, but also be aware of the deadline for appeal if no notice is sent. Key deadlines for 2023 are noted here:
Maryland
December – notice received (1/3 of all properties)
February 10 – appeal deadline, first level
Out of cycle properties receive no notice
Deadline to appeal is December 31st, 2023 for the 2024 taxation year
Appeal to PTAAB – 30 days after notice of 1st level decision
Appeal to Maryland Tax Court – 30 days after 2nd level decision
New Construction – appeal deadline is 45 days from the date on the notice of assessment
Virginia
Appeal deadlines vary by county/municipality.
Fairfax county
Assessed values are released in late February
April 1st, 2023 – Administrative review deadline
June 1st, 2023 – Board of Equalization appeal deadline
Loudon County
Assessed values are released in late January/early February
First week of March (estimate: March 6th, 2023) – Administrative review deadline
June 1st, 2023 – Board of Equalization appeal deadline
City of Alexandria
Assessed values are released in mid-February
April 15th, 2023 – Administrative review deadline
June 1st, 2023 – Board of Equalization appeal deadline
Arlington County
Assessed values are released in mid-January
March 1st, 2023 – Administrative review deadline
April 15th, 2023 – Board of Equalization appeal deadline
Prince William County
Assessed values are released mid-March
June 1st, 2023 – Administrative review deadline
July 1st, 2023 – Board of Equalization appeal deadline
District of Columbia (DC)
April 1st, 2023 – Deadline for Tax Year 2024 first level appeals
April 18th, 2023 – Deadline to return Income & Expense Survey
September 2023 – Deadline to appeal to Real Property Tax Appeal Council (RPTAC) - 45 days after 1st level decision (or by September 30th, 2023 if no notice received)
September 30th, 2023 – Deadline for filing a TY2023 petitioner in DC Superior Court
What information do you need to provide to assessors?
State or local legislation provides assessors with the right to request income and expense information and to inspect properties to the extent needed to make an assessment. This information may have a direct impact on your assessed value, and it is worthwhile to examine how it may affect future taxes. It is also critical to ensure you comply with the deadlines and requirements for each jurisdiction, to avoid incurring costly penalties.
In Maryland, commercial property owners receive income and expense questionnaires in the final year of the assessment cycle, just before reassessment. They must be completed and returned by May 15th. For properties valued at more than $5,000,000, there are significant penalties for failure to complete the filing: $100 per day up to a maximum of .1% of the value of the property. Virginia does not mandate that the income and expense report be completed but will need to review it if the property’s assessment is appealed. Prince William County will subpoena owners of properties to supply the information if needed. In the District of Columbia, properties that are required to file the annual report are listed on the DC government website. Owners of these properties are required to electronically submit income and expense reports by mid-April. The deadline for 2023 is April 18th, and if the deadline is missed, a penalty of 10% will be added to the final tax bill.
Authors
Scot Casto
Senior Director
Rob Unkle
Senior Director
Authors
Scot Casto
Senior Director
Rob Unkle
Senior Director
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