While businesses are certainly feeling the economic impacts of the COVID-19 pandemic, there isn’t much property tax professionals can do to find relief in 2020 based on current economic conditions. Instead, any property value adjustments due to COVID-19 will be seen in 2021, especially if current economic conditions persist throughout 2020.
2020 IMPACT OF COVID-19 ON PROPERTY TAX
For most states, property is valued on January 1, so the current state of the economy is not a justification for lowering your 2020 assessed value of property. This is because your property’s value hadn’t yet been impacted on January 1, 2020, regardless of when you actually receive your assessment.
There are some states with disaster allowances, but these aren’t likely to help you reduce value due to COVID-19. Most disaster clauses protect against physical damage to a property, like tornadoes and hurricanes, not economic damage like we’re seeing now. Texas’ Attorney General even released an opinion stating just that: property owners economically hurt by COVID-19 are not exempt from property taxes under the disaster clause. Nonetheless, you should still check the disaster relief clauses and any announcements from your states to determine eligibility.
2021 IMPACT OF COVID-19 ON ASSESSED VALUE OF PROPERTY
Next year, assessors will take 2020 market conditions into consideration, but the impact could vary depending on assessor methodology. There are a number of reasons why 2021 assessments might not fully reflect the economic impact of COVID-19, including:
- Assessments Calculated Using Average Sales Across Several Prior Years
- You won’t see as much impact on your 2021 property value as you might like. If you assessor averages sales across years, your assessment could factor in sales from 2018-2020, so economic impact in 2020 would be diluted by prior years. But, that also means you could see the impact of 2020 affect your property value through 2023.
- Assessments Calculated Using Sales from Before the Pandemic
- Most assessors use a framework that looks at market conditions from more than 6 to 9 months ago (so before the coronavirus pandemic). In this case, they could end up assessing your property based on pre-pandemic conditions.
- 2021 Is Not A Revaluation Year
- Many states/assessors do not revalue property every year, instead opting to revalue property based on a set schedule (say, every 2 years, every 4 years, etc.). Even within a county or town, an assessor may only revalue a portion of the property each year. If 2021 is not a revaluation year, you may not see any change in 2021 property values due to the current pandemic.
WHAT YOU SHOULD DO
Even though you may not have a COVID-related argument for lowering your property values until 2021, you should start preparing now. Here are a few things you should do:
- Benchmark 2020 values against similar properties and companies.
- This will give you a starting point for any appeal arguments in 2021. If you find that your property is overvalued already, you should challenge it in 2020, if possible.
- Collect information about market activity.
- Start gathering information now so that you have the support you need in 2021. You should collect data about market activity in your industry, including property sales, current rents, concessions landlords are providing, vacancies, and performance of other companies in your industry.
- Use 2020 as a “trial run” for 2021.
- The appeal process this year is going to look a little different because both informal and formal appeals work will be done remotely. And we’re all finding out that making presentations and arguments over the phone or video conference is a lot different than in person. So, use this year to learn what approach works best (both for your presentation and points of argument). Then, if virtual appeals are the norm in 2021, you’ll be ready.
WATCH our webinar to learn more
Our CEO Stephen Wicks led a webinar on August 13 to discuss the short and long-term consequences of the pandemic, as well as the steps you can take now to prepare. Click the link below to watch the video now.