One negative impact of the red hot Multifamily market is the increase in property taxes. With class A and B properties frequently trading, tax assessors are provided with ammunition to re-appraise Multifamily properties. In times of low trading and reduced property value, many assessors will only do a property tax assessment every 3 years. However, the increased value in apartment deals across the nation has incentivized counties to increase their assessments in order to take advantage of the potential for increased property taxes.
With many markets recovering from 3-5 years of negative growth, the high sales price of comparable properties can potentially cost apartments owners hundreds of thousands of dollars on their bottom line. Gilbert D. Davila of the American Property Tax Council warns that “assessors’ records frequently misstate a property’s age, square footage, net leasable area, number of rental units, unit mix, and amenities. Such errors can significantly increase an assessment.”
Given the landscape of today’s Multifamily market, it is wise to consult with a local property tax consultant. In Atlanta, companies like Property Tax Consulting have successfully lowered the property taxes for thousands of property owners this past year. Firms like PTC only earn a fee if the property owner saves money so there is no risk in having them review your tax assessment. The regulations guiding tax assessments behave more like an art then a science. Don’t accept high property taxes without getting a second opinion