Most property owners view property taxes as a fixed operating expense—the cost of doing business. But in today’s market volatility, assessments are often lagging indicators that fail to reflect reality.
Most counties reassess on three- to five-year cycles. However, market analysis suggests that 40% of multifamily parcels in growth counties are currently over-assessed by 15–25%.
For a standard investor, this is an annoyance. For a portfolio operator, this is a direct hit to Net Operating Income (NOI) and, by extension, asset value.
The “Multiplier Effect” of Tax Savings
Before dismissing a small tax reduction, consider the valuation math. Commercial and larger residential portfolios are valued based on Cap Rates:
Asset Value = NOI ÷ Cap Rate
If you successfully appeal and save $600 in annual taxes, and your market Cap Rate is 5%, you haven’t just saved cash flow—you’ve forced $12,000 in appreciation per unit.
Tax savings multiply.
Why Most Appeals Fail
If the math is this compelling, why don’t more operators appeal?
Usually, they hit three specific roadblocks:
1. The “Income vs. Sales” Conflict
Assessors typically use the Sales Comparison Approach (what the house next door sold for).
Investors argue based on the Income Approach (what the property actually earns).
Without clean data to prove your income valuation is the true fair market value, the assessor wins.
2. Lack of Clean Comp Data
Finding comparable sales requires hours of scrubbing MLS data or county records. Few operators have time for this.
3. Complex Hearing Deadlines
Appeal windows are notoriously short—often just 30–45 days.
If you operate across state lines, tracking deadlines for dozens of counties becomes a logistical nightmare.
The Blueprint: How to Build a Winning Appeal
To secure a reduction, you must move from emotional arguments to a data-backed strategy.
Here is the workflow successful operators use:
1. The Audit (Detecting the Error)
Don’t appeal every property. Focus on assets where the county’s valuation is more than 10% above fair market value.
Check two things:
Market Value:
Is the assessment higher than what you could sell it for today?
Equity:
Is your property assessed significantly higher than an identical property down the street?
(This is known as an unequal appraisal.)
2. The Evidence Package
You don’t win appeals with emotion—you win with documentation.
A strong evidence packet should include:
The Income Approach:
Your current rent roll and a P&L statement showing that at the current tax level, the property underperforms.
The Sales Approach:
Three verifiable comps of similar properties sold recently for less than your assessed value.
Deferred Maintenance:
If the property needs a roof, foundation repair, or major systems work, include photos and contractor estimates.
This proves the condition is lower than the “average” condition assumed by the assessor.
3. The Filing Strategy
Most counties offer an informal review before the formal hearing deadline.
Always attempt to settle here first—it is faster and less adversarial.
If that fails, file for a formal board hearing.
The Bottom Line
Property tax appeals are one of the few value-add strategies that require zero capital expenditure.
By treating your tax assessment as a variable cost rather than a fixed one, you protect your NOI and compound your portfolio’s value over time.