If you own real estate, it’s likely you recently received a new assessment from your County Assessor. Whether the property is your primary residence, a multi-unit apartment building, or commercial space, the assessed value can have a significant impact on the property taxes that you will owe the next year and beyond. The assessed value is determined on March 1 of each year, and is based on several factors depending on the type of property. The County Assessor considers everything from neighborhood and build quality for residential real estate, to estimated net operating income and capitalization rates for commercial properties. Because a majority of the factors considered are often subjective and estimated, the assessed values can be significantly higher than the actual value of the property or neighboring properties.
So if you think your assessment is wrong, what is the next step?
If you receive your Form 11 Notice of Assessment of Land and think your assessment is wrong, the first step is to request a review of assessment to appeal your valuation. This must be done within 45 days from the date you received your notice. Fortunately, you do not need substantive evidence and support for your appeal at the time of filing. You will only need to inform the Assessor that you want to appeal and provide what you believe the assessed value of the property should be. This gives you time to prepare and develop the proper information based on the type of property.
From there, an attorney can assist you in determining and developing the most effective information needed to achieve a reduction in assessed value that more closely reflects the value of your property. The attorney can also meet with representatives in the Assessor’s office and discuss the factors in the Assessor’s determination and, if no resolution can be reached, represent you before the Property Tax Assessment Board of Appeals (often referred to as the PTABOA). The PTABOA is a five member board that listens to both the Taxpayer and Assessor and determines the assessed value for the property. Those decisions can also be appealed to the Indiana State Board of Tax Review, the Indiana Tax Court, and ultimately, the Supreme Court.
However, what happens if you believe your assessment is wrong but you have missed the 45 day deadline?
You may still have a chance to go back and correct an improper assessment if an objective error was made by filing a Form 133 Petition to Correct Error. For purposes of the Form 133, an objective error includes:
1) taxes that were illegal as a matter of law;
2) mathematical errors in computation;
3) a state or county error that resulted in the taxpayer not receiving:
a) an appropriate credit (such as, homestead, long term care, and other property credits)
b) an exemption permitted by law, or
c) a deduction permitted by law.
While you will not be able to go back in time and contest the subjective assessment of the value of the property, you can fix issues that caused higher tax bills that resulted from errors or improper application of laws. Essentially, as long as your contention or dispute with the County Assessor is not about the facts of the property or its use, you could have the right to challenge the tax imposed even after the 45 day assessment review period.
For example, a land developer generally has the right to keep his property from being reassessed and reclassified as more valuable commercial property, even though that property often has high commercial value, until the land is sold to another party that is not a land developer or until the developer begins construction. This is often referred to as the "developer discount," even though it is not really a discount, but rather a postponement of a reassessment. If the land developer or a successor land developer realizes that the property was improperly reassessed, the developer could have paid hundreds of thousands dollars in taxes more than required. This error can sometimes be difficult to spot by a subsequent land developer because the property's assessment, in this situation, would often be close to fair market value or otherwise an appropriate assessment, but for the "discount". With a Form 133, the land owner has the right to go back three years and correct this error.
ABOUT THE AUTHOR – Chris Shelmon
Chris Shelmon is an attorney at Gutwein Law. Chris earned his JD from the Indiana University McKinney School of Law. He focuses primarily on real estate.