What to Do During the Pandemic to Prepare for Proof of Commercial Property Value Changes

The COVID-19 pandemic has affected virtually every business, big or small, good or bad. With news changing every single day, our heads are spinning. At Property Consulting Group, we want to arm you now for next year’s property tax season.  Taking the proper steps now will help during a potential valuation appeal if changes are not accurately reflected in your January 2021 commercial property valuation.

Read this quick list of tips so you can track and save the proper information for your property throughout this uncertain time.

  • Keep precise and careful accounts of your expenses and income.
  • If your business is shut down, keep detailed records of your close dates and related changes in revenue.
  • If you’re open, but occupancy has drastically changed, or revenue has fallen, track that closely. Keep any and all relevant documentation.
  • If you are a landlord, track unpaid rent and vacancies.
  • If a property is damaged due to lack of occupancy, take photos, and track the cost of remediation.

When HCAD appraises properties in 2021, it will most certainly be a challenge for them to account for the unprecedented effects of COVID-19 on businesses.

When you receive your valuation next March, we will be right here to file your appeal. Our team can use all the careful records you’ve kept over the year to protest your property valuation. Our goal is to make sure your commercial property is taxed at a fair value, no matter how uncertain the times.

Call today to learn more. At Property Consulting Group, we are here to answer your commercial property tax questions. 281-880-6500

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Houston Property Tax Protests Soar Amid Pandemic

What do you get when a pandemic hits a growing economy right after property values are assessed?

A record number of propery owners protesting their property taxes.

Terrible Timing for Property Owners

The unfortunate timing (not that there would ever be a good time for a pandemic) of the onset of the COVID-19 pandemic has left property owners startled at their increased property values.

State law dictates that property assessments are to be based on how the property stood on January 1st of the year in question. On January 1, 2020, nearly 75% of Harris County properties were assessed at a higher value than the previous year. At that point in the year, the area was continuing its decade-long population surge and economic growth pattern.

As late as January 14th, commercial real estate services company, Cushman & Wakefield were predicting a 17.2% increase in the population of Houston from 2020 through 2029. This prediction was based on the trends identified in the last ten years as Houston gained more than 1.2 Million new residents from 2010 to 2019. Few could have foreseen what would happen by mid-March.

As the Harris County Appraisal District’s property values hit mailboxes in April, commercial property owners already suffering from decreased revenues and difficulty collecting rent, were wide-eyed to see an increase in their property value.

47% More Property Tax Protests

Appealing your property valuation is an important way to ensure your property is assessed at a fair and equitable valuation – during a pandemic or not. This year, Harris County has had a 47% surge in property tax protests over the same time last year. That adds up to 97,534 more cases.

We’ve been watching the news for any changes, however, it does appear that protesting your property value to get it reduced, will be the best way to get tax relief. However, we do urge you to keep a close eye on your local taxing entities and get involved in the tax-rate setting process. If rates are reduced, there could be some relief at payment time.

While the Harris County appeal deadline was May 15th, there is still time to file in Dallas where the deadline was extended to June 15th. Our team of property tax consultants is ready to serve you. We can file your property tax protest and attend hearings on your behalf. Just fill out one form and we’ll take it from there. Or call today: 281-880-6500

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Budget Shortages Present Challenges as Hurricane Season Arrives in Texas

UPDATE June 2, 2020: Mayor Pro Tem Dave Martin announces that federal coronavirus relief funds will bridge the budget gap, allowing the city to keep 2021 cadet classes and avoid furloughing 3,000 city employees.

Few industries haven’t experienced challenges due to the coronavirus pandemic. While restaurants, hair salons, and the entertainment industry are top of mind, city and municipal budgets almost immediately took a hit too.

Lost sales tax, especially in a state where we don’t have income tax, will be a hurdle for keeping the city running smoothly and safely, all while preparing for the impending storm season.

Millions Lost in Sales Tax Revenue

Mayor Pro Tem, Dave Martin estimates the lost sales tax revenue to be in the range of $180 to $200 million. People have been staying home while bars, restaurants and stores were shuttered, spending less money. In addition, conventions and events set to be hosted here, have for the most part been canceled for the remainder of the year. The total lost tax revenue is sure to hit the cities budget in a catastrophic way.

Houston Adjusts Spending

The Houston Police Department has canceled all six of next year’s cadet classes to save money. And, while the city plans to furlough more than 3,000 employees that are not part of the fire, police, or sanitation departments, there are many essentials that cannot be cut.

  • Storm season is upon us, and the city is working on disaster drills to try and simulate how to respond to a hurricane during a pandemic – a vital expense that cannot be cut.
  • Domestic violence and crimes at commercial properties are up since the pandemic started – so the city can’t cut back on law enforcement.
  • Important development projects such as El Dorado Boulevard widening and phase one of the Houston Spaceport can’t take hits either. Both projects feature vital drainage components that require precision to avoid potential flooding.

At Property Consulting Group, we understand the economic challenges so many are facing during the pandemic. As we all work together to navigate the current state of things, feel free to call our team at 281-880-6500 with any of your commercial property tax questions.

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Seven Excellent Reasons to File a Commercial Property Tax Appeal in Houston

Did you know you could protest your commercial property valuation? If you think your assessment came in too high, appealing your property valuation could save you a lot of money.

Like everything related to taxes and the government, the idea of going through the steps to appeal your property taxes can be daunting. As business owners often think in terms of ROI, you might wonder, “will the effort be worth the gains?” To help you sort through that answer, we have seven excellent reasons to go ahead with filing your Houston commercial property tax appeal. (Don’t wait! The deadline is May 15th)

Could you sell your property for the assessed value?

Let us handle the paperwork.

If your valuation came back at a higher number than you could sell the property for, you should absolutely appeal your property taxes.

Are other properties like yours assessed at what yours was assessed at?

Have you seen other properties very similar to your’s sell recently? What was the final sale price? If it was lower than your valuation, appeal!

Did your property undergo renovations this year?

Renovations can be tricky for a commercial property. If your property was rendered dysfunctional for part of the year during renovations, if your income earned fell due to renovation closures, or if your property was in disrepair before renovations you may need to appeal your property taxes. Valuations are determined by the way your property stood on January 1 of the year in question, so if your property value was altered after January 1, and adjustment might be necessary.

Did your property suffer damage this year?

The Harris County Appraisal District has many properties to evaluate each year. If your property was damaged and that was not accounted for, you should protest your property valuation.

Was your property damaged or dysfunctional on January 1?

Again, January 1 is the most important date on your calendar for property tax values. If your property was damaged or dysfunctional on the first of the year, you should appeal if your valuation does not account for it.

Did your property lose income this year?

Income-generating properties are valued based on the income they produce. If the income your property generated was less than previous years, your value may need to be adjusted to account for it.

We’ll do it for you. Making your work in the process quick and painless.

Taxes make business owners cringe, which is why most business owners have an accountant. The same applies to your property taxes. You don’t have to go through any lengthy processes to appeal your property taxes – just let the experts at Property Consulting Group handle it for you. All you need to do is fill out a short form and we will take care of the rest!

Start today by calling 281-880-6500 or filling out this request today.

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No Disaster Exemptions for Texas Property Taxes for COVID-19

Due to the overwhelming damage and loss of property in the Houston area after Hurricane Harvey, some property owners received a break on their property tax bill.

The law provides 15-100% in property tax exemptions for properties damaged in a natural disaster, depending on the extent of the damage.

COVID-19 Does Not Qualify for Disaster Relief for Property Taxes

However, despite a declared disaster in the state, due to COVID-19, there will not be tax exemption property tax relief. Many believe, including Governor Abbott, that the largest form of relief may come in the form of reduced property tax rates for 2020.

The law was written to help property owners suffering losses due to natural disasters such as hurricanes, floods, or wildfires. According to State Attorney General, Ken Paxton, it does not apply to the medical disaster of the COVID-19 pandemic.

We do encourage anyone who feels their property has been assessed inaccurately, to protest their property taxes. The assessment is based on how your property stood on January 1st. The deadline for your tax appeal is May 15th each year. Call or contact us today to get started. 281-880-6500

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Houston Office Market: Will 2020 Be Another Tough Year?

The Houston Chronicle reports that the Houston office market will likely face another tough year. With the energy industry shrinking due to the low price of oil, the local office sector is feeling the pain.

Increased Vacancy Rates

The tough reality for landlords leasing out office space in Houston is that vacancy rates are up to 17% – the highest since 1992. Commercial property owners generally need an 85-90% lease rate to be profitable. Right now there is a large number of square feet available for lease (85 buildings with at least 100,000 square feet available), making it a great market for tenants.

CBRE data shows that leasing activity, in general, was down 17% in 2019 over 2018 and the demand for office space is falling in other industries as well.

The Houston Chronicle reports that commercial property owners are working on renovations, property improvements, and facelifts to try and remain competitive in the tough market.

Remember to Document Renovations & Income Changes

When your building has a change in NOI it could affect the value of your property. Keep close records of your occupancy and income for tax purposes.

If you’re undergoing a large renovation at your commercial property, be sure to document everything you do. Keep receipts and timelines for future reference.

If your property is still under renovation on January 1, the property assessment date each year, take photos of the state it is in so you can protest your valuation if it doesn’t reflect the condition of your property as of January 1st.

A changing economy is often a time when property values may flux. Keep Property Consulting Group on speed dial so we can help you fight for a fair tax valuation through the property tax appeal process. Call today.  281-880-6500

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Houston Property Taxes Contribute to Debate on Affordability

Houston’s Affordability is the Current Driver of the Influx of People, Business, and Economic Growth. What Factors Drive that Affordability?

In a recent story, Houston’s well-recognized affordability comes under question as the writer speculates maybe it is not all that affordable. Texas Monthly claims Houston is less affordable than New York City. However, Reason cites the article and questions it’s logic.

While we certainly can’t claim expertise in how affordable Houston is versus other major metropolitan areas, we can share with you a few of the reasons we’ve attracted 1.1 million new residents since 2010. Houston’s affordability (whether perceived or actual) relies on a few important factors that residents like.

  1. Texas as ZERO state or local income tax.
  2. Median home prices in Houston in 2018 were $178,000. Well below the national median of $240,000. Ranking second in the top 10 list of growing metros with affordable housing in 2018.
  3. Houston made Turbo Tax’s Top 10 list of cities with the lowest tax rates.
  4. Houston property values are assessed every single year for property tax purposes. There is a method built-in to the system for protesting that assessment to ensure your property taxes are fair.

If you are not convinced that all of these factors contribute to over-all increased affordability in Houston, don’t take our word for it. Keep an eye on businesses and people moving into the area.

The city has been growing for almost 10 years straight, adding 92,000 new residents in 2018 alone. And Texas was ranked number two in the top 10 list of best states for business.  If Houston wasn’t as affordable as people thought, word would have gotten out by now.

In the meantime, if you are navigating your Houston area property taxes, give us a call. We can file your property value protest for you and make sure your case is presented with expertise and proper evidence of the actual value. Call today.  281-880-6500

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New Texas Law Provides Tax Relief for Properties Damaged by Disasters

House Bill 492 has taken effect as of January 1, 2020. The bill was co-authored by Rep. Gary VanDeaver and provides temporary tax relief for home and property owners in declared disaster areas.

To qualify:

Flooded Floor in House

A property has to be at least 15% damaged.

Has to be in areas declared a disaster by the Governor.

And the local taxing unit has to adopt the exemption.

The bill provides four levels of tax relief, based on the percentage of damage to the property. Those levels are the following:

  1. At least 15% of the property is damaged, but not more than 30%. Usually, the property can continue to still be used for its intended purpose. (15% exemption)
  2. At least 30% of the property is damaged, but no more than 60%. Only non-structural damage, and the waterline, if applicable is less than 18” above the floor. (30% exemption)
  3. At least 60% damaged but is not a total loss. The property has suffered significant structural damage, requiring extensive repair or the waterline is above 18” from the floor. (60% exemption)
  4. If the property is a 100% loss, meaning repair is not feasible. (100% exemption)

Property owners may apply for an exemption through their local appraisal district. In the case of Houston, Harris County Appraisal District. In the past there has been a process posted on the appraisal district website, we will update this news with a link once it becomes available.

If you need help lowering your property tax bill, we can help! Call today for help with property tax protests. Just make sure you reach out to us before the May 15th deadline. 281-880-6500

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How Do You Estimate Property Taxes for Your Commercial Property?

For business owners, budgeting and financial strategy are a top activity at the beginning of the year, and often every quarter. As part of this process, it is important to include the cost of taxes in your budget planning. When it comes to commercial property, many are looking for a good way to project what their property tax liability will be for the next year. It is tricky to estimate property taxes without knowing what might impact your property in the upcoming year, and while there is no silver bullet or crystal ball, we have a few tips for you to keep in mind as you escrow internally for your future tax payments.

Track Impacts on Your Property as They Happen

A lot of planning for the year means tracking things as they are happening that might impact your tax bill. Be aware it might impact you, and budget for the possibility. These items may include:

Income Increase: Income-producing properties such as shopping centers/hotels/apartment complexes are subject to increasing revenues. When NOI (Net Operating Income) is increasing, it is great for business, but save for a potential tax increase. An increasing income, means an increased property value, making it important to be aware so that IF it does it doesn’t shock you.

Additions: If you’ve added square footage, you’ve likely increased revenue and property value. And taxes. Make sure you plan for it. This can be especially tricky when investing in an addition as you do need to allocate a budget for the increase in taxes.

Recently Purchased Property: If you’ve just purchased the property the year before and what you paid for the property is more than what the property was previously assessed at, you could be looking at a large increase in property taxes. Your purchase price could impact the newly assessed value.

Change in Vacancies: The quickest way to add value is to buy a high-vacancy building and do things to get tenants. A new management company, more marketing, or TLC on deferred maintenance can help you fill empty spaces, increasing the income produced by the property and potentially increasing the value and taxes. 

Increased Rental Rates: If you increase rental rates where tenants have been there a long time, you may drive up the value of your commercial property.  It is not a guarantee to happen right away, in fact, it might take a few years, but eventually, your value and taxes will increase. 

Be Aware of Temporary Spikes

It is important to plan for the cost of temporary spikes in revenue at your property. An example of this is when hotel owners at the end of 2017 saw a huge spike in revenue due to displaced families after Hurricane Harvey. The increase in 2017 meant they had to pay more in 2018 even though revenues dropped back down in 2018.

We urge you to stay cognizant of changes to your property every year, so you can plan for your property taxes. If you do get a valuation that is not accurate, we would be pleased to help you protest your property taxes. Just make sure you reach out to us before the May 15th deadline. 281-880-6500

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How is Commercial Property Tax Calculated?

In Houston and all of Texas, property taxes are high compared to other states. The reason for our high property taxes is that it is the main source of funding for local services such as schools, emergency services, and municipal utilities. Without a state income tax, revenue has to be higher from other sources.

To calculate commercial property taxes there is a step-by-step process that must take place first:

  • The county appraisal district determines the current value of each property every year.
  • Exemptions are subtracted. (Exemptions are offered to charities and for solar or wind energy devices. The majority of commercial properties do NOT qualify for any exemptions.)
  • Tax rates are then set by the various local taxing entities such as school districts, cities, counties, and others during publicly held meetings.
  • Your tax is calculated and you receive your tax bill – usually between October and December. (You could receive several bills, as each taxing jurisdiction may bill you individually. The possibilities include the school district, the county, and the municipality.)
  • Tax payments are due in January.

Calculating Your Commercial Property Tax Rate

To calculate your commercial property tax gather your assessed property value, exemptions, and local tax rates.

To get the number, first subtract your exemptions from the full assessed property value.

Then use the tax rate percentage and the remaining property value to calculate your tax bill.

If a property is worth $125,000. Has a $25,000 exemption. And the total tax rate is 1.5% the property owner will have to pay $1,500.

$125,000 – $25,000 = $100,000. 1.5% of $100,000 is $1,500.

The accurate valuation of your commercial property value is the most important part of ensuring you pay a fair tax bill. Once the property value is assessed each year, you have until May 15th to file an appeal if you feel the assessment is inaccurate.

Our team offers expert advice and will even handle your commercial property tax protest for you! Call today to ensure your case is filed before the May 15th deadline. 281-880-6500

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