Given that money is involved, tax appeals are often contentious affairs. This can be uncomfortable for some, so I have a suggestion aimed at making it a bit easier.
I was originally trained as a rights-of-way appraiser for highway land acquisition. As you know, highway acquisitions involve folks who, of course, didn’t ask for their property to be appropriated. We were taught to always treat the property owners with respect and give them the benefit of doubt at every opportunity.
During the rights-of-way appraisal inspection, we seized upon opportunities to demonstrate fairness in land and improvement value calculation. Property owners could easily see that we were trying to be as fair as possible; this usually went a long way toward making the acquisition process more acceptable.
Here are three examples of how to actively demonstrate similar fairness in tax appeals when using the income approach for assessment determination:
- Select a market rent that all parties will immediately judge as readily achievable in the local market.
- Make sure that a market based vacancy factor is applied, even if the appellant has not included one in their own analysis.
- Give up a quarter point on your cap rate selection… how precise can we be, really?
The intent is for the appellant to quickly recognize your effort to achieve equity. This may soften the conversation.