What happens in a commercial property tax appeal?

Many property owners purchase commercial real estate as an investment. On an individual level, commercial real estate can be a reliable source of income, as commercial leases often last for multiple years and allow you to collect all of your maintenance costs or pass the responsibility for property maintenance on to tenants.

For businesses, owning commercial property can be a way to minimize operational costs and to have total control over the facilities the company uses. Instead of sending money to a landlord each month, the company can begin to accrue equity, making its facilities a possibly valuable company asset.

However, property ownership comes with certain liabilities, including the obligation to ensure the property against liability and to pay real estate taxes. Occasionally, commercial land owners will find themselves in an untenable situation where the tax authority overvalues their property. How can you appeal or challenge a property valuation that does not reflect what the land or building is worth on the open market?

The process depends on what the property is worth

You have the right to initiate a valuation appeal when you disagree with the taxable value the state assesses for your commercial real estate. Exactly how you appeal will depend on the true value of the land or building in question. Michigan law allows for a Small Claims appeal when the property has a value of less than $100,000. When it is worth more than $100,000, you may require a review by a state Entire Tribunal.

Regardless of which approach you take, you will need statements from professionals, like real estate agents, explaining why the valuation for the property is too high or why the recent increase is too steep given the location of the property, the value of other nearby properties or the condition of the property.

Real estate disputes become complicated quickly

When you disagree with the assessed value imposed on your property by the state of Michigan, you need to know your rights as an owner. You will also need to prepare for a possible hearing and gather the necessary evidence to protect your company’s finances.

Whether you are one person who invested in property for financial gain or a business owner trying to keep the company budget balanced, handling real estate issues carefully can help protect the resources you have invested in the commercial real estate that you own.