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How to Build a Strong Case for Your Commercial Property Tax Appeal
For commercial property owners, an inaccurate tax assessment can result in thousands—or even millions—of dollars in unnecessary taxes. But appealing your property valuation isn’t just about filing paperwork; it’s about building a compelling, data-backed case that challenges the assumptions made by appraisal districts.
The process can be complex, but with the right approach, significant savings are possible. Here’s a step-by-step guide to building a strong appeal case that gets results.
Step 1: Collect Accurate Financial Data
The foundation of any property tax appeal is clear, current, and accurate financial data that tells the real story of your property’s performance. Appraisal districts often use mass appraisal methods that assume a “one-size-fits-all” approach to value. To challenge these assumptions, owners need to present property-specific details.
Key Financial Documents to Include:
- Current Rent Roll: Includes leased spaces, tenant names, lease rates, and terms.
- Income and Expense Statements: NOI (Net Operating Income) directly impacts valuation. Show actual revenues, expenses, and operating challenges.
- Vacancy and Concession Data: Highlight any vacant units, lease rollovers, or rental concessions offered to attract tenants.
Example: A retail property in Houston experienced a 20% vacancy rate due to tenant turnover, yet the appraisal district valued the property as if it were fully occupied. By providing detailed rent rolls and NOI adjustments, the owner secured a 15% reduction in their assessment.
Step 2: Leverage Comparable Sales Data (Sales Approach)
Appraisal districts often rely on comparable sales to assess property value, but their selected comps may be outdated, irrelevant, or inaccurate. To build a strong case:
- Identify Relevant Comparables: Use recent sales of properties similar in age, size, condition, and location.
- Adjust for Differences: Make sure to account for factors like building quality, deferred maintenance, and income-producing potential.
- Challenge Irrelevant Comps: Proactively identify and challenge sales used by the appraisal district that don’t align with your property’s specifics.
Example: An industrial warehouse in Dallas was compared to newly built facilities nearby, despite being 20 years old with significant maintenance needs. A formal appeal adjusted the valuation downward based on more appropriate comps, saving the owner $50,000 annually.
Step 3: Highlight Market Conditions (Market Approach)
Appraisal districts often use optimistic or generalized assumptions about market performance. A strong appeal case uses current market trends to tell a more accurate story:
- Vacancy Rates: Is your property in a struggling submarket where vacancy rates are higher than regional averages?
- Rents and Concessions: Are competitors offering aggressive concessions that impact your ability to achieve market rents?
- Oversupply or Obsolescence: Are you competing with newer developments that put downward pressure on rents?
Real-Life Market Challenge:
An office building in Austin was valued based on pre-pandemic rent levels. However, vacancy rates had climbed to 25%, and tenants were demanding lower rents. By providing local market data, the owner successfully lowered the valuation by 20%.
Pro Tip: Appraisal districts may not account for submarket volatility or underperformance. Property-specific and market-specific evidence can make or break your case.
Step 4: Document Property-Specific Challenges
Your property’s physical and operational condition matters. Any issues that negatively impact value must be documented and included in your appeal.
Examples of Property-Specific Challenges:
- Deferred Maintenance: Roofing, HVAC systems, or parking lot repairs can lower a property’s market value.
- Functional Obsolescence: Older buildings may lack modern amenities or energy-efficient systems that reduce their desirability.
- Operational Issues: Ongoing tenant turnover, high expenses, or management challenges all impact value.
Example: A retail strip center in San Antonio struggled with deferred maintenance and a failing roof that discouraged tenant retention. Including contractor estimates for repairs during the appeal justified a 12% valuation reduction.
Step 5: Address the Appraisal District’s Errors
Appraisal districts rely on mass appraisals, which leave room for errors. A strong case involves identifying and correcting these inaccuracies:
- Incorrect Square Footage or Property Use: Does the assessment list the wrong building size or property classification?
- Misapplied Comparables: Are luxury properties being compared to older Class B or C assets?
- Ignored Income Reductions: Has the district failed to account for vacancies, rent concessions, or rising expenses?
By challenging flawed assumptions, you can often achieve meaningful reductions in assessed value.
Step 6: Present Your Case with Expert Representation
A strong appeal isn’t just about data—it’s about knowing how to present it effectively. Property tax consultants bring:
- Expert Negotiation Skills: They know how to engage with appraisal districts to negotiate fair outcomes.
- Data-Backed Strategies: Professionals understand how to apply income, market, and cost approaches to valuation.
- Appeal Process Experience: If informal negotiations fail, consultants are prepared to represent your case before the Appraisal Review Board (ARB).
Why It Matters: Many property owners underestimate the complexity of appeals and leave savings on the table by not involving an expert.
How FirstPointe Advisors Builds Winning Cases
At FirstPointe Advisors, we specialize in building strong, data-backed cases that deliver results for commercial property owners across Texas. Our process includes:
- Comprehensive Financial and Market Analysis: We ensure your property’s actual performance and market conditions are accurately reflected.
- Detailed Valuation Comparisons: We identify inaccuracies in comps, income assumptions, or physical assessments.
- End-to-End Representation: From filing the appeal to negotiating with appraisal districts and presenting before the ARB, we manage the process seamlessly.
Don’t Overpay in 2025: Act Now
Building a strong case for your property tax appeal requires expertise, preparation, and data. If your commercial property has been overvalued, now is the time to act. Partnering with a professional can save you significant time and money—while ensuring you only pay your fair share.
Garret Cope, Senior Manager, Property Tax
Contact FirstPointe Advisors today for a complimentary property tax review and let us help you plan ahead for success.
James “Garrett” Cope
Senior Manager, Property Tax
FirstPointe Advisors, LLC
3201 Dallas Pkwy., Suite 200
Frisco, TX 75034
Main: 214.253.0056
info@first-pointe.com
