Proactive Property Tax Strategies Benefit Florida’s Commercial Owners

While Florida property owners won't receive their Truth In Millage, or TRIM, notices until late summer, now is the time for them to do all they can to avoid overpaying.  

By being proactive, property owners can decrease their largest line-item cost in Florida’s markets. This is the message from Fort Lauderdale-based tax advisory and consulting firm Property Tax Alliance Group, or PTAG, which works with clients to help them mitigate tax liability. 

Bisnow spoke with PTAG Managing Partner Jeff Nelson about improving owners' property tax management programs.

“Considering the changing economics from 2022 to 2023, owners will be extra-sensitive to their highest line-item cost: property tax,” Nelson said. “Since 2023's proposed values aren't published until the fall, taxpayers should consider proactive methods during the first few months of the year.”

Nelson said that although most Florida businesses and commercial property owners think county appraiser offices' annual information requests are strictly enforced government compliance, they need to be careful about what they reveal. Taxpayers might disclose more information than necessary, which can have a negative impact on their next assessment, support a higher value and increase their property tax liability, Nelson said.

“Controlling the flow of information between owners and appraisers is critical to managing commercial real estate assessments,” he said. “Hiring experienced agents familiar with the process will mitigate the possibility of accidental sabotage.”

Counties take several factors into account when assessing properties, including an asset's net operating income and cap rates, PTAG partner Tim Hart said. When county appraisers don't have detailed financials for a commercial property, they only have market data to reference for a pro forma valuation. Many consider this a more fair and equitable tax-friendly appraisal consistent within a location's market, he said. The specific financials are only required to support a value reduction at future value adjustment board hearings. 

Hart recommends that property owners shouldn't submit financial data if they haven't responded to county requests yet, and that they consult with their property tax agent. 

“Their agent should already know the probability of a 2023 appeal and the type of evidence required,” he said. 

How Can Property Owners Be More Competitive In Florida’s 2023 CRE Landscape?

PTAG provides full-service property tax consulting to Florida commercial property owners with a comprehensive suite of customizable tax reduction solutions for every stage of ownership. PTAG’s process helps clients plan for transactions with strategies to reduce their tax liability upon acquisition and disposition. 

For investors interested in expanding their Florida footprint in 2023, Nelson highlighted the value of his firm's proactive methodology.

“Clients benefit from enrolling assets at their lowest possible initial tax basis, significantly impacting NOI,” he said. “Our institutional owners are especially keen on strategies that give them an extra edge in the market.”

Nelson stresses to his clients the importance of communicating their acquisition and disposition plans before closing to implement optimal tax mitigation practices.

“The most successful owners are more conscious of controlling every possible taxable event during the buy phase than in years past,” he said. “Our early involvement significantly impacts their basis, allowing our clients to be more competitive.”

Nelson said effective methods to control cost basis ahead of time increase profitability.

“Buyers are willing to pay a premium to win contracts, knowing their operational costs will be less than competitors’ normal thresholds,” he said. “Entity purchases and unique approaches to allocations play a significant role in our practice.”

PTAG works to help buyers set the lowest basis upon acquisition and sellers to mitigate documentary stamp tax overpayments. Nelson’s firm then manages client assessments and appeals on their behalf at county value adjustment boards when necessary. 

“As a result, owners can avoid excessive tax overhead by communicating their plans with professionals capable of initiating protocols long before transactions close,” he said. “The impact on first-year NOI is substantial, and avoiding excessive doc stamp taxes improves their ROI on the way out. Protecting their assessments with annual reviews and appeals ensures maximum profitability for the duration of the ownership cycle.”

Don’t Forget About Tangible Personal Property Tax

Florida taxpayers who lease, lend or rent property must also file a return for the tangible personal property tax, or TPP, by April 1. Nelson said that whether fully depreciated in accounting records or not, companies should report all property still in use or currently in possession on the Florida Department of Revenue's form DR-405.

TPP includes items such as computers, furniture, tools, machinery, signs, supplies and leased equipment that hold value other than real estate, and which are used in a business or rental property. 

This article was produced in collaboration between Studio B and Property Tax Alliance Group. Bisnow news staff was not involved in the production of this content.

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