Attorneys, tax agents bracing for anticipated influx of tax appeals
By Risa Polansky
With property valuations due in August and many owners expecting lower assessments in a depressed market, local attorneys and tax agents are gearing up to dispute what they expect will be overvalued appraisals.
"Given the challenges in the real estate market the last 18 months, property values have suffered, and there's a concern that the assessments made by the property appraiser are not going to be commensurate with the reductions in real value," said James W. Shindell, chair of law firm Bilzin Sumberg Baena Price & Axelrod's real estate group. "We believe that there's going to be need and opportunity to challenge the assessments in the coming years."
To address the expected need and take clients through the property tax appeal process, the firm has teamed with real estate entrepreneur Mitchell A. Feldman to form subsidiary FBS Property Tax Abatement.
"In years past there have been a number of appeals filed, but in the last year or so the number of appeals filed has skyrocketed," said Jon Chassen, a partner in the law firm's real estate and distressed property groups. "The fact of the matter is, the property appraiser has a very difficult job under the best of circumstances determining the values of every piece of real property in the county, and in the current market I think that job is even tougher, and as a result there are a lot of people and a lot of companies whose properties are going to be over-assessed for 2009."
Norman J. Silber, partner in law firm Ruden McClosky's Miami office, also said he expects more disputes.
"Values in the marketplace have gone down… and the question is going to be how much," he said. "Every property owner is going to think their property is worth less than last year."
Once property owners receive truth in millage — TRIM — notices in August, "people are going to be upset, absolutely," Mr. Silber predicted. "There are probably going to be a higher number of challenges this year because budgets are tight."
Miami-Dade Property Appraiser Pedro J. Garcia acknowledged the recent surge in appellants, noting that in the past year the county has seen 70,000 appeals, up from 40,000 to 45,000 the year before.
He hopes to see fewer after releasing assessments this summer.
Because voters in 2008 voted to limit increases in the assessment of non-homesteaded properties to 10% beginning this year, owners who bought their homes recently should see some relief, Mr. Garcia said.
"Definitely we are in a declining market," he noted.
The property appraiser's office is looking at 90,000 sales across the county, including foreclosures and short sales.
Still, Mr. Garcia is optimistic.
"Hopefully there will be less people appealing," he said. "But if the people don't agree with the numbers, my recommendation would be to apply for the Value Adjustment Board."
The board, made up of three county commissioners and two school board members, makes the call on all appeals with the help of special magistrates — professional appraisers and attorneys — who hold hearings and issue recommendations to the board.
Mr. Garcia served as a special magistrate for a decade before he was sworn in in January as Miami-Dade's first elected property appraiser.
His advice to those appealing assessments before a magistrate: "bring comparable sales," as well as income information for commercial properties.
Often property owners come unprepared to their hearings, Mr. Chassen said.
"Every time I go, I see an individual taxpayer — usually a homeowner — who says "it just seems too high,'" he said.
But "you have to know the market. You have to know what comparable sales exist. You have to be able to analyze those in order to determine what truly is a comparable sale to your particular property. You have to be able to analyze the comparable sales used by the property appraiser to see if they are really appropriate to determine value."
But, Mr. Silber noted, it's tough in this nearly frozen market to find comparable sales.
Still, he advised, "one of the things a homeowner can do is examine the homes in their neighborhood."
Foreclosures, though they act to lower property values and then presumably valuations, shouldn't count as comparable sales, he said.
That's a major question in this market, said tax agent Britt J. Rosen, president of Pinecrest-based Rosen Tax Appeal.
He said also that because of the preponderance of mortgage fraud in South Florida, the property appraiser could unknowingly be using a fraudulent sale in comparing values.
He stressed the importance of coming to an appeal prepared and suggested hiring an expert.
"When property owners come in to represent themselves after the filing, if they're not skilled in doing it or do not know the correct procedures, they may not get a great result," Mr. Rosen said.
Still, he called the magistrates fair.
"They will listen to the argument and they are reasonable and they have been making reductions," he said.
Appraiser Mr. Garcia noted that about 55% of appellants see reductions.
Regardless of whether a property owner intends to dispute an appraisal, Mr. Rosen advised paying property taxes in full.
Should the county agree to lower the bill after an appeal, property owners are credited the difference.
The appeals process won't begin until after TRIM notices are sent in August.
Already, newly formed Bilzin Sumberg subsidiary FBS Property Tax Abatement is reaching out to clients, focusing on larger and more highly valued properties, Mr. Chassen said.
"August is not that far away."