3 Things Landlords Need to Know this Property Tax Season
It is property tax season and with that means property owners need to keep a few major things in mind. 1. Protest….
It is property tax season and with that means property owners need to keep a few major things in mind.
1. Protest. The deadline to protest taxes is May 15th. We advise that based on current tax rates, all of our clients protest their taxes without exception. Even centers that are one hundred percent occupied with fully NNN leases should protest their taxes.Regardless of whether the tenant’s leases require the owner to protest taxes, it is in the best interest of the landlord and the tenant to do so. High taxes equate to higher NNN’s which can make releasing a vacant space challenging and can be viewed as a risk to lenders and buyers. It also limits the property owner’s ability to push market rents and can jeopardize the health of the tenants. You can access a link to the necessary forms here. If you have Foresite asyour property manager, give us a call and we will handle this process for you.
2. NNN Estimates. If your leases are NNN and your valuations shot up, then be sure that your property management department is adjusting the estimates for the year. Send the property tax statement to the tenant. Some leases even require this. If you are successful in the protest the tenants will be grateful but even if you are not, tenants will appreciate the advance notice and preparation for the extra amount due. Also, it provides transparency for tenants to see the actual cost of property taxes, so that they as voters can understand the issues.
3. Credits. Landlords often feel pressured by tenants to reduce the NNN amounts due to increasing property taxes. Not all landlords are in a position to do so. If landlords do choose to assist tenants, we recommend they structure the assistance in the form of a temporary credit that is clearly labeled “Temporary Property Tax Relief”. This accomplishes several things. First, it establishes the adjustment as temporary. Second, it allows the owner to recoup the credit in the event of a successful protest. Third, is not passing through the full NNN’s can create a serious challenge in the event of a sale of the property as it establishes a precedent and is viewed by buyers and lenders as a credit and collection loss. This credited amount can also be shared with the appraisal review board as evidence of the necessary steps the owner must take to keep the property occupied.
If you have any questions regarding the process, your property or creative ways to work with your tenants please contact our office.