If you own income-producing property, you probably find that property taxes are your biggest expense.
Recently, one of our clients thanked us for helping him lower his property taxes -- but he went on to say that we actually helped increase the value of his property. How can that be? Let us explain.
When we perform an assessment review of an income-producing property such as an apartment complex, we are often able to use an adjusted income sheet when formulating the income approach. After going through the appeal process, we are often able to reduce property taxes by as much as 20 percent -- or more! Naturally, this boosts the property owner's net operating income (NOI).
Here's an example of what this might look like:
| |
Before |
After |
| Gross Income |
$250,000 |
$250,000 |
| Utilities |
$25,000 |
$25,000 |
| Insurance |
$15,000 |
$15,000 |
| Property Taxes |
$50,000* |
$40,000* |
| Snow Removal |
$5,000 |
$5,000 |
| Landscaping |
$3,500 |
$3,500 |
| Miscellaneous |
$50,000 |
$50,000 |
| NOI |
$101,500 |
$111,500 |
*After the appeal process, Integrity was successfully able to reduce property taxes by 20 percent.
As you can see, the NOI before Integrity's review of $101,500, divided by a cap rate of 10 percent, equals an indicated value of $1,015,000.
The NOI after Integrity's review of $111,500, divided by a cap rate of 10 percent, equals an indicated value of $1,115,000. That's an increase of $100,000!
This example illustrates how Integrity can help a property owner increase the value of a property. In this case, the owner saves $10,000 per year on property taxes. In addition, if he ever decides to sell or market the property, the lower taxes would likely:
- encourage a quicker sale in a competitive market
- command a higher purchase price
During challenging times like this, it is important to demonstrate due diligence -- and it certainly can help a property owner survive and thrive! Even in the event that Integrity finds a property to have been fairly assessed, it is nice to know that your property is in good health.
One last thing to consider: You may not own an income-producing property, but a tax review can still be quite beneficial. The Indiana assessment system is based on three approaches to value." Our consultants will use the additional approaches to see whether you qualify for a lower tax bill.
Take a minute to say hello
As always, we love to hear from our clients. If you have new contact information or some good news about your business that you'd like to share, drop us a line! We welcome your comments and suggestions, as well. Email us at info@integritytax.com.
Meet Integrity
For the last 10 years, Ruth Woebbeking has been an important part of the Integrity team.
As a property administrator, she handles many of the details related to client retention, which is so important to our line of business.
Ruth has a natural way of communicating and establishing a relationship with both clients and assessing officials.
She has 15 years of marketing experience and helps guide Integrity's strategic marketing plan. She assists in creating a variety of marketing materials and offers ideas on other projects, as well.
Ruth is always available to offer a helping hand to the sales and service teams.
Ruth loves to spend time with her family, especially her two granddaughters. She enjoys travelling and is very active in her church. She is also a wonderful baker! Just ask her cat Bonnie, who happens to love her pumpkin pies!
