Thought 2021 Florida Property Taxes Were High? Wait Until Next Year

Even as Florida’s commercial property owners continue to navigate their way out of the pandemic, many are recoiling from the shock of their 2021 property tax bills. Despite forced closures, eviction moratoriums, capacity limitations and other disruptions as a result of the coronavirus, most of Florida’s commercial real estate received a higher assessment on this year’s Notices of Proposed Property Taxes/Truth in Millage, or TRIM, which arrived in the mail in August.

Given the state of the current market, 2020’s economic disruptions might be easily forgotten. Nevertheless, they will be considered during value adjustment board hearings throughout the state for the next six to eight months. 

Property owners had the opportunity to defend themselves against a 2021 property tax increase through careful record keeping, according to principals with the Property Tax Alliance Group, a boutique property tax consulting firm located in Fort Lauderdale focused on managing Florida property tax liability for corporate, commercial and institutional owners.

“Owners who meticulously documented their income, extraordinary operational expenses, hours of operation, staff schedules, loss of productivity and other analytics will have significantly improved the probability of successfully appealing their 2021 assessments,” said Jeff Nelson, a former county commercial appraiser and a managing partner at PTAG.

As a side note, owners will need to apply the same diligence to the 2022 tax year if they have not yet recovered from the pandemic’s effects. 

Meanwhile, the window to file petitions for 2021 tax appeals has passed, and owners will learn how well they budgeted for their tax bills that begin to arrive in the mail in early November. A 4% discount applies to tax payments made before Dec. 1 and decreases one percentage point each month thereafter until April 1, Florida’s official deadline.

“Have you already bought, or are you planning for acquisitions this year?” Nelson said. “If so, options exist for structuring deals to establish a lower tax basis than typical initial thresholds — opportunities that most will miss.”

Nelson said that his firm prepares clients for portfolio or entity purchases, and sets up allocation schedules for them to receive the most favorable tax treatment for their planned acquisitions.

“Our clients benefit from these types of early approaches as well as forecasting tax fluctuations, which help the grading and financing processes for potential investments,” added Steve Tropea, director at PTAG. “Lenders don’t like to see higher property tax estimates but appreciate clients acknowledging the market risk upfront.”

Nelson said commercial property owners must not let their guard down after this tax season. 

“If a pandemic and its disruptions weren’t enough to encourage county appraisers to proactively mitigate increases to 2021 values, it is safe to assume there will be increases again for 2022,” Nelson said. “Professional property tax advisers can help buyers navigate the nuances of the state and local government tax system and minimize liabilities for commercial property owners during all stages of the investment cycle.” 

This proactive stance should continue after the sale. 

“The economy impacts property owners’ bottom lines, and how well they document those effects will translate well in subsequent tax appeals,” said Tim Hart, a partner at PTAG. “Our job is to convey how our clients' bottom lines reflect their properties’ values independent of popular opinion.”

Florida does not levy income tax and relies solely on sales and property tax revenues to operate the state’s public schools and municipalities. Nelson said this places the onus on taxpayers to diligently monitor their property tax assessments and regularly appeal property values.  

“There is an inherent conflict with typical property tax valuations,” Nelson said. “Counties, when setting values, should look at all market conditions and their effects on a property’s performance. However, they won’t recognize all of the financial obstacles leading up to the lien date of Jan. 1 unless an owner or their agent can provide evidence.”

Absent this evidence, counties will view property in the best possible light. 

"By the time the tax rolls were certified this past June, prevailing attitudes were that the pandemic had ended, the markets had recovered, and Jan. 1 was a distant memory for county assessors," Nelson added. 

However, some owners are still experiencing effects from the changing economy.

“Single-tenant businesses such as health clubs, hospitality, theaters and restaurants are still suffering and this should impact Jan. 1, 2022, values,” Nelson said.

Property owners should not assume Florida appraisers will automatically reduce values during times of economic turbulence unless they force the issue. Even then, local governments will focus on factors that support the highest values. 

“Those who waited until August before initiating their processes have already left money on the table for the 2021 tax year and need to temper their expectations because counties are prepared to defend their values,” Nelson said. “We are near the end of this fiscal year, and the books will soon close for determining property values for 2022. How prepared will you be for next year’s tax increases?”

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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