How Do I Appeal My Property Taxes?
I have practiced law locally for nearly twenty years. During these years I have represented numerous property owners in the context of appealing the real property taxes assessed against their property interests for significant tax reductions and refund check amounts to my clients. The following Questions and Answers address some of the basic issues or concerns that have been raised in my discussions with clients in regard to this unique type of litigation.
Q: How is my real property valued for taxes as assessed on my property tax statement?
A: County assessors are required to value your property on an annual basis. Property taxes are due to be paid on a semi-annual basis; first half by May 15 th. and the second half by October 15 th . However, the property taxes due to be paid this year are based upon your property’s assessed value as of January 2 nd of the previous year.
The market value of a property is the price a willing and able buyer will pay a seller for the property in an arm’s length transaction. However, in the absence of a recent sale of your property, assessors typically implement three valuation approaches: market, cost, or income.
The market approach, arguably the most common method applied to value real property, involves the use of sales data and information from recently sold comparable properties to determine market value. It is critical in this approach to have accurate information regarding the size, age, condition and location of your property to determine which comparable sales figures best reflect the current market value for your property. The cost approach is often implemented for recently constructed properties. And the income approach, available only for income-producing properties, considers at what price an investor is willing to purchase your property for the related income stream through its operation. This approach considers the overall market including, but not limited to, rental and vacancy rates and implements a capitalization rate.
Determining whether your property is over-valued can be based upon determining which approach is more accurate considering overall market factors and other information. Attorneys use these valuation methods and information germane to the subject property to negotiate with assessors to explain why the value of their client’s property should be reconsidered. Frequently expert appraisers are retained to demonstrate to an assessor an opposing value for your property in an effort to reach resolution and a resulting property tax reduction or refund check.
Q: Who can appeal the real property taxes assessed against a property?
A: Any person with an interest in property may file a petition to contest or determine the validity or amount of property taxes assessed against their property. Landowners typically bring such a petition. However, tenants of commercial properties may hold this right especially when the lease obligates the tenant to be responsible to pay part or all of the property taxes.
Q: How do I appeal the real property taxes assessed against my property?
A: Real property tax petitions are filed in the district court of the county where the taxes are levied. Petitions may claim the property has been assessed a value that is unfair or not
uniform to other similarly classified nearby properties, assessed at a value greater than its actual value, improperly classified, or that the tax levied is not proper or the property is exempt from taxation.
Section 278.01 of the Minnesota Statutes sets forth the procedure by which the petition must be properly filed with the court and served upon certain governmental offices. The deadline to complete such filing and service is on or before April 30 th of the year in which the tax is payable. Petitions that are not timely served and filed are subject to automatic dismissal. Property owners or petitioners must also timely pay the property taxes owed on their property that is subject to their petition or it will be automatically dismissed, as well.
Q: What is the litigation process after I timely file and serve my real property tax petition?
A: Section 278.05 of the Minnesota Statutes requires petitioners of income-producing property to disclose certain information to the assessor within two months after the petition filing deadline. The so-called “60 Day Rule” mandates that income and expense information including, but not limited to, two (2) years of year-end financial statements, rent rolls, and proposed budgets must be provided to the county assessor by June 30 th after the filing of the petition. Petitioners who fail to comply with this provision may have their petition subject to automatic dismissal.
Months after filing your petition, the Minnesota Tax Court assigns a trial date or what is commonly referred to as a “first setting” trial date to your case. Attorneys generally endeavor to provide the necessary information on an informal basis with the assigned assessor and communicate the proposed valuation reduction in negotiation prior to the first setting date to determine whether an agreement can be reached. Sometimes the assessor will request an inspection of the subject property which should be arranged to allow all parties and counsel to view and discuss the current condition of the property. Inspections raise another opportunity for parties to exchange information and attempt to reach agreement on the value of the property.
If the parties are unable to reach an agreement prior to the first setting trial date, petitioner must either reach agreement with the county to request a second setting trial date or be prepared to exchange appraisals with the county no later than five days before the trial date. Assuming the parties are unable to reach agreement after setting a second trial date, the petitioner and county must obtain court approval before a third, and date certain, trial is scheduled. Typically tax court judges will want to understand the status of the litigation and issues in dispute before determining whether to grant a date certain trial date. In complex cases, judges may order a pre-trial in lieu of anther trial date to assist the petitioner and county to have sufficient time to consider a particular issue or issues that is precluding the parties from reaching an agreement.
Absent agreement or dismissal, a petition is tried before a judge who issues a subsequent order with findings that determines the value of the property and other issues in dispute. The Tax Court’s decision can be subsequently appealed to the Minnesota Supreme Court.