The DMA Way

Durham & Wake County Revals Coming Soon

by DMA Staff | Oct 23, 2015

By: Patrick Price, CCIM | Director, Property Tax at DMA 

If you own commercial or industrial property in either major North Carolina jurisdiction, you should be preparing now for the upcoming reappraisals that are effective for the 2016 tax year.  As you may or may not be aware, these new valuation notices will be issued as early as the first couple of weeks in December of this year.

The reason this is so important in North Carolina, and these counties in particular, is because they only perform these "revals" once very 8 years.  That's an unusually long cycle, and the new assessments will reflect significant changes in the economy and individual markets since 2008.  Moreover, whatever value is assessed for 2016 will generally be locked-in for the next eight years, meaning the impact on your current and future tax liabilities is substantial.

Time is of the essence for multiple reasons, not the least of which is that this initial notice of reappraisal will create a flurry of activity in each jurisdiction.  We expect most taxpayers will see an increase...from modest to dramatic, depending on the asset category and location.  Upon initial mailing, it is typical for thousands of appeals to be filed - as such, the assessing authorities are motivated to reconcile legitimate issues, address credible concerns and resolve as many disputes as possible.  Without question, this is the optimal time period in which to impact change in the assessment for the next 8-year cycle; whether that's calling the assessor's attention to unique nuances of your property, challenging factual errors in the assessment record, bringing to their attention functional or external obsolescence issues impacting your property, and/or providing other valuation-related evidence for this review.  Typically, taxpayers must request such an informal review within 30-days of the notice.

Thereafter, you will have opportunity for a more formal appeal to the county-level Board of Equalization and Review.  While this is certainly a productive and fair venue, it would be unwise to not take full advantage of the informal review process as well.  Most assessors are receptive to credible and relevant information, and will work cooperatively with the taxpayer in order to achieve fair & accurate assessments.  Thus, it is highly recommended that you be prepared to review and evaluate the new assessment notices as soon as they are received in early-December.  Given the short window of opportunity for the first level of appeal, if you aren't proactive in determining your property's value and what an accurate assessment "should be" at present, then you may find yourself at a disadvantage once the notice is mailed and the clock has already started ticking on your rights.  Knowing that this event is coming, it is advisable to act now and eliminate the need for fire-drills or the stress created by having to make decisions with a sense of urgency.

I should also mention that you are not necessarily precluded from appealing your assessment in future years, post-reval.  However, practical experience indicates that both the assessment staff and the BOER's may be somewhat reluctant to make significant changes in the middle of a reappraisal cycle.  Whether accurate or not, failure to protest an initial assessment in the first year of the reval can be perceived as agreement with, or acceptance of, the county's original appraisal.  Additionally, you must always argue or prove the value as-of the last reval period; meaning in a future tax year you will be making a retroactive valuation case.  While this is certainly possible, it can be more difficult - both for the appellant to present and the adjudicator to accept.

So the conclusion is that 2016 is an extremely critical tax year for property owners with assets in these counties.  It is the optimal time to evaluate the fairness of the new assessment and to negotiate with the assessing authorities.  Any success in obtaining a reduction or mitigating the amount of increase - if warranted - will impact the next 8 years' tax liabilities.  And these notices are coming before is the time to prepare.  Firms such as DMA, and others, can proactively assist you in this process if you lack the capacity or expertise to perform this task internally.

Please do not hesitate to contact your local DMA office should you have specific questions or requests.