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Property Tax Appeal Information


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Property tax reduction information presented by Paramount Property Tax Adjusters. Our team expedites optimal results by utilizing
the performance of our appraisers, real estate attorneys and assessment appeal agents, also preexisting relationships with the county assessors and using approaches to value that yield the lowest possible assessment. We continue to provide the best value and best results in the industry with a money back guarentee.

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Property Tax Appeal Information

  1. 1. PARAMOUNT PROPERTY TAX ADJUSTERS California Property Tax Strategies Information Session
  2. 2. Why Should You Review Your Property Taxes <ul><li>Property Tax expense represents an average of 30% of actual operating expense. </li></ul><ul><li>60% of property owners are overpaying on taxes </li></ul><ul><li>On average only 12% of eligible property owners appeal their property taxes. </li></ul><ul><li>Not only will you lower your property taxes but you get a refund as well. </li></ul>
  3. 3. Property Tax Industry History <ul><li>In the 1990’s, the Property tax consultant business was mostly handled by the top 5 accounting firms. It was an extension of their existing tax consulting business. The top accounting firms represented fortune 500 companies. Today many companies such as Comcast, Apple, Shell and Kmart have internal property tax agents handling their appeal work. Maintaining a 90% success rate on over 10,000 cases, our company continues to achieve optimal results in the industry for the best value </li></ul>
  4. 4. California Government Agencies <ul><li>State Board of Equalization: Oversees all property tax assessors and appeal procedures . </li></ul><ul><li>Counties </li></ul><ul><ul><li>Assessor: Valuation of all county property . </li></ul></ul><ul><ul><li>Clerk of the board, Assessment Appeals Board: Manages all the property tax appeal applications and hearings. </li></ul></ul>
  5. 5. Types of assessment appeals <ul><li>Real Property: Homes, all commercial property, land, airplanes, boats. </li></ul><ul><li>Personal or business property: Equipment, Furniture </li></ul><ul><li>Possesory interest: When a person or entity leases, rents, or uses real estate owned by a government agency for its exclusive use, a taxable possessory interest occurs. 1 The taxation of this interest is similar to the taxation of owners of privately owned property. However, a holder of a possessory interest frequently pays significantly less property tax than the private owner of a similar property </li></ul><ul><li>Prop 8 reduction: One Year Change in Value and refund </li></ul><ul><li>Supplemental: change in ownership, new construction (60 days) </li></ul><ul><li>Base Year Change: Appeal the set base year value; can appeal back as far as, up to 4 years. </li></ul><ul><li>Calamity </li></ul>
  6. 6. Proposition 13 <ul><li>Changed California to acquisition value property tax system. Taxes are based on purchase price or Fair Market Value. </li></ul><ul><li>Real Property assessment shall not increase by more than 2% per year unless change in ownership or new construction. </li></ul><ul><li>Tax rate fixed at 1% per year plus local spending measures. </li></ul>
  7. 7. Special Issues Under Proposition 13 <ul><li>Property stays in the same legal entity (>50% Rule (Rev. & Tax. Code Sec. 64(c)) </li></ul><ul><ul><li>Partnership buy-out </li></ul></ul><ul><ul><li>Family wealth planning </li></ul></ul><ul><ul><li>Property transfers between entities (change ownership % before and after (Rev. & Tax. Code Sec. 62 (a)(2)) </li></ul></ul><ul><ul><ul><li>Recapitalization </li></ul></ul></ul><ul><ul><ul><li>Sales and Leaseback </li></ul></ul></ul><ul><ul><ul><li>Reorganization </li></ul></ul></ul>
  8. 8. Who Should Apply <ul><li>Property owners who have bought in the height of the market from 2003 to 2008. Also Tenants of these properties that are responsible for paying the property taxes. </li></ul><ul><li>Property owners for whom the original assessed value was greater than the purchase price. </li></ul><ul><li>Lenders or mortgage debt holders who have notes in or facing foreclosure. </li></ul><ul><li>Property Owners who have environmental issues </li></ul>
  9. 9. How does the refund work <ul><li>When you apply for Property tax appeal based on Prop 8 in the state of California, the property owners are stating that the assessed value of the property is greater than the current value and the property owner would like for the county to grant the tax payer an opportunity to challenge their property value. For a 2009 appeal, tax payers have until November 30 th in most counties. The value they are stating is based on the date of January 1 st 2009. Applicants can only use comparables and data from July 1 st 2008 March 30 th 2009. If a new lower value is granted, the tax payer is entitled to a tax refund for the taxes paid from July 2009 until June 2010. Some counties will also keep the new lowered value for 2010, However some do not. </li></ul>
  10. 10. How to calculate Tax Savings <ul><li>Take the current year assessed value and property tax amount found on the current year’s tax bill. </li></ul><ul><li>Then calculate the difference in new value for 1/1/2009 from current assessed value. </li></ul><ul><li>Take the difference and use the tax rate of .0115% </li></ul><ul><li>This is your tax refund or tax savings. </li></ul>
  11. 11. Valuation <ul><li>Value is based on assessment date 1/1/2009 </li></ul><ul><li>Fair market value: </li></ul><ul><li>Market comps: Price Per Square feet, Price Per Unit </li></ul><ul><li>Income Approach: Market Rate not actual income </li></ul><ul><ul><li>Use Market Rent </li></ul></ul><ul><ul><li>Use Market Vacancy </li></ul></ul><ul><ul><li>Use Market Cap rate </li></ul></ul><ul><ul><li>Even if the property is performing at above market rent and 100% occupied they still have a case for property tax refund . </li></ul></ul><ul><ul><li>Cost Approach: Used in developments and land valuations. </li></ul></ul>
  12. 12. 2009 Valuation Challenges <ul><li>Lack of capital, transaction, market data: </li></ul><ul><li>Discrepancy between buyers and sellers: cap rate, risk Price </li></ul><ul><li>Time: You have until November 30 th to file your appeal. </li></ul><ul><li>Money: Counties are experiencing revenue declines and will need to fight for every tax dollar they can. </li></ul>
  13. 13. Case Study <ul><li>How Commercial Banks and Lenders can take a proactive approach to reducing their Portfolios' property taxes: Paramount Property Tax Adjusters set out to lower commercial banks distress notes and bank owned Property taxes.   The client in this example was a midsize regional bank focused on commercial lending within California.  The apartment building was a 25 unit apartment building located in San Diego.  It had an assessed value of $3.8 million dollars.  The value was high due to the buyer's intent of condo conversion and they purchased the project at the height of the market.  The property was in receivership and the receiver for the bank authorized Paramount Property Tax Adjusters to file for an appeal of value before the bank auctioned the property in June.  By taking this strategy, the receiver and Paramount Property Tax Adjusters reduced the amount the bank encumbered in back taxes after haven taken ownership of the property at auction.  This can be done if the property is in receivership or if the owner of the property gives authorization for the appeal.  Also it also reduces the value of the supplemental or the new value from change of ownership. The County Assessor automatically reassesses when a change in ownership happens from an auction of a property. Often times due to the bank taking back the property there is no purchase price or value to set a new base year.  This means the assessor does a supplemental value and the new owner has 60 days to appeal. The  Assessor offices are so overwhelmed that they do not do the diligence needed to get the correct value and often over value the property due to lack of information about the property.  By taking a proactive approach we can get the lowest value possible by using various valuation techniques like band of investment valuation models. Bottom Line:   Paramount Property Tax Adjusters reduced the assessed value from $3.8 million to $1.9 million Reduced Annual Property Taxes from $43,700 to $21,850 </li></ul>
  14. 14. Tips <ul><li>1.   Your success will depend on the quality of your supporting market data . When using the market approach , be sure to make the appropriate adjustments to your comps. </li></ul><ul><li>2.   File with the clerk an &quot;exchange of information&quot; report ten days before the hearing so you can view the case the assessor has against you. Also you should know what the appraiser uses for their surveys. </li></ul><ul><li>3.   Attend a hearing to get accustomed to the proceedings. Success will depend on how you present your case. Leave time for the board to ask questions.  </li></ul><ul><li>4.   Knowledge and experience in the area of appeal rules and procedures is paramount. You should read the assessor manual before the hearing. </li></ul><ul><li>5.   When using cap rates , use the band of investment cap rate calculation. For land leases use the net present value of one calculation of valuation. </li></ul><ul><li>  6.   For the income approach make sure you have conducted verifiable and detailed surveys for vacancy rate, cash on cash return, cap rates, mortgage rates and terms. Accuracy of the data is key. </li></ul><ul><li>7. Some Assessor / Appraisers will not speak to you until the date of the appeals hearing. If you are prepared with the correct data you can avoid the hearing if you and the assessor's appraiser agree on your purposed lower value. If you do not come to an agreement you then have to go in front of the appeals board and argue your case.   </li></ul><ul><li>8 . When responding to the notice of hearing request, be aware not to sign in the area where you are actually withdrawing the application. We have seen this happen to many people. </li></ul>
  15. 15. Why Not Do It Yourself <ul><li>For investment properties you have the burden of proof to support your application for appeal of value. This means the county assessor will not do it for you and you will need to go to the hearing. </li></ul><ul><li>Data: The cost and time it takes to correctly present the needed data for a successful appeal. </li></ul><ul><li>Time: On average it takes two days of work to prepare for a hearing; Also, the actually hearing could take an entire day. </li></ul><ul><li>Experience: Last year we filled over 10,000 appeal applications. Our preexisting relationships with county assessors and appeal board members has led to our current success rate of 90% of lowered assessed values. </li></ul>
  16. 16. Why Us <ul><li>Paramount Property Tax Adjusters is a Property Tax Assessment Reduction Firm that specializes in Commercial Real Estate Property Tax Reduction. </li></ul><ul><li>Our team of Real Estate Appraisers, Assessment Appeal Agents, and Real Estate Attorneys achieves optimal results by using several approaches to value, negotiating with the assessor on your behalf and presenting your best case at the assessment appeals hearing. We specialize in reducing your property taxes. </li></ul><ul><li>We have some of the top tax agents in the county, some having over 2 decades of tax appeal experience. Many of them used to work for the assessor’s office. We also have a money back guarantee and do not take a case unless we think we can win. Our tax agents work for clients such as KB Homes, Best Buy, and Ikea. There are many options for you to choose. We pride ourselves on not only our results but the customer experience. If you choose to be our client you will experience exceptional customer service, as well as being given consistent updates. </li></ul>
  17. 17. COMMERCIAL INDUSTRY PRICE COMPARISON Paramount Property Tax Adjusters Competition Appraisers Attorneys CPA's Hourly Fee None $290 $500 $250 $200 Flat Fee Yes$1,000 Yes $5,000 Yes $2,500 Yes Yes Contingency Fee Yes 20-30% Yes 35-50% No Yes Yes Property Valuation Yes Yes Yes No Maybe Tax Appeal Rules and procedures Yes Yes Maybe Maybe Maybe Attend Hearings Yes, No additional costs. Maybe Yes, See Hourly Fee Yes, See Hourly Fee Yes, See Hourly Fee
  18. 18. Fees Assessed Value Range < $3 million $3 million-$10 million $10-20 million $20-50 million Option 1: Contingency Fee: with Application Fee 30% of 1 st year savings and/or refund Application fee: $195 30% of 1 st year savings and/or refund Application fee: $500 25% of 1 st year savings and/or refund Application fee: $1,000 20% of 1 st year savings and/or refund Application fee: $5,000 Option 2: Contingency Fee: with No Application Fee 40% of 1 st year savings 35% of 1 st year savings 30% of 1 st year savings 25% of 1 st year savings Flat Fee Options 1 year assessment appeal $1,000 $3,500 $10,000 $25,000
  19. 19. Items Needed <ul><li>Here is a list of items we will need to process your Commercial Property Tax Reassessment Application. </li></ul><ul><li>Fill out the client intake forms. Go To </li></ul><ul><li>If property is an income producing property, send last year’s and current year’s operating statement or history and current rent roll, with tenant info, rental rates, term of lease, lease periods, and concessions. </li></ul><ul><li>Copy of the most recent property tax bill and your county Assessor’s Parcel Number. This information is helpful but not required. </li></ul><ul><li>Details of the latest transfer of property ownership, including the amount of any mortgages, interest rates and terms, down payment, cash or other compensation and the resulting total price involved is also helpful but not required. </li></ul><ul><li>Description and cost of any additions, deletions, or renovations to the property during the past four years. </li></ul><ul><li>Any additional information that you know of that could be useful in determining property value. </li></ul>
  20. 20. Appeal Process <ul><li>Phase 1: Valuation of property and potential property tax savings. We will collect information from you for the valuation process. This information can include last year's operating history, current rent roll, pictures of the property, any loss of income information, copy of your current tax bill. This process will take 1-2 weeks </li></ul><ul><li>  </li></ul><ul><li>Phase 2: Appeal of Assessment </li></ul><ul><li>We will file all the necessary paperwork and data on your behalf for the value reduction to the appropriate assessor office. We will then begin the tracking of the process as well as negotiate directly with the assessor to expedite the process. Applications need to be filed by November 30 th in most counties. </li></ul><ul><li>  </li></ul><ul><li>Phase 3: Formal Appeals Hearing </li></ul><ul><li>We will represent you and provide our evidence on your behalf against the assessor to the appeals board. This can be within 2 years of application filing although the current time frame is 1 year. </li></ul><ul><li>  </li></ul>
  21. 21. Contact Information <ul><li>Paramount Property Tax Adjusters </li></ul><ul><li>Sales and Questions: 858-225-1200 or </li></ul><ul><li>877-450-8595 </li></ul><ul><li>[email_address] </li></ul><ul><li>Fax: 866-823-5577 </li></ul>