Delaware Reassessments in 2024: What Commercial Property Owners Need to Know

Why Are These Reassessments Happening?

The reassessments in New Castle and Sussex Counties are part of an effort to update real property values that have been stagnant for decades. New Castle County’s last full reassessment occurred in 1983, and Sussex County hasn’t reassessed properties since 1974. Over the years, property values have shifted dramatically, but the assessments used for property tax purposes have remained unchanged, creating significant imbalances.

Delaware’s courts have mandated these reassessments to ensure that properties are taxed based on their current market value. For commercial real estate owners, this means that outdated and potentially inequitable tax assessments will be updated—likely resulting in new tax bills that better reflect today’s property values.

Why Should Commercial Property Owners Pay Attention?

Property taxes are a significant operational cost for businesses, and changes in property values can substantially impact financial planning. In neighboring Kent County, where DMA recently assisted clients through a similar reassessment, we observed commercial real estate values increasing by 4-7 times. Such a rise has the potential to significantly affect tax liabilities in New Castle and Sussex Counties as well.

Here’s why the upcoming reassessments are particularly important for commercial real estate owners:

• Potential for Substantial Tax Increases: If your property value has risen considerably over the last few decades, your new assessment could lead to a significantly higher property tax burden.
• Impact on Operating Costs: Increased property taxes can directly impact your bottom line, potentially squeezing cash flow and increasing operational expenses.
• No Tax on Personal Property: Delaware does not tax personal property, such as business equipment, machinery, or inventory. The reassessments apply only to real property (land and buildings), meaning businesses won’t face additional taxes on personal property.
• Ongoing Reassessment Cycle: After this reassessment, both counties will move to a 5-year reassessment cycle, meaning commercial real estate will be regularly reassessed to ensure that values stay current.

What to Expect from the Reassessments

Commercial real estate owners in New Castle and Sussex Counties can expect new assessment notices to be mailed out in November 2024. These notices will reflect updated market values for your real properties, and you’ll have a brief window to appeal the assessments if you believe they’re inaccurate.

Here are the key points to keep in mind:

• November 2024: Expect to receive new property tax assessment notices
• Short Appeal Window: Expect a window of just 3-4 weeks to schedule informal meetings and appeal assessments if needed
• Formal Appeal Options: If the informal appeal doesn’t result in a satisfactory adjustment, you will have the option to pursue a formal appeal

How to Prepare for the Reassessments

As a commercial real estate owner, it’s critical to be proactive in preparing for these reassessments. Here are some steps you can take to protect your business from potentially inflated tax liabilities:

1. Understand Your Property’s Current Value: Review your current property tax assessment and compare it to the current market value of your property. This can give you a sense of whether your property’s new assessment is likely to increase, and by how much.
2. Gather Relevant Documentation: If you suspect your new assessment may overstate your property’s value, start gathering evidence now. This could include recent appraisals, comparable property sales, and other data that supports a lower valuation.
3. Prepare for the Appeal Process: The window to appeal will be short—typically just 3-4 weeks—so it’s important to be ready. As soon as you receive your assessment notice, schedule an informal meeting with the assessor’s office to review the valuation.
4. Engage a Property Tax Expert: Navigating a reassessment can be complicated, particularly for commercial properties that may involve complex valuation issues. Engaging a property tax consultant, like DMA, can provide the expertise and support you need to challenge an inflated assessment.

How DMA Can Help Commercial Real Estate Owners

At DMA, we understand that property taxes are a major operating expense for businesses, and an inaccurate assessment can put unnecessary strain on your finances. We’ve successfully helped businesses in Kent County, where we saw significant increases in property values during a similar reassessment process, and we can do the same for you.

Here’s how DMA can assist:

• Assessment Reviews: We’ll thoroughly review your new assessment to determine if it reflects your property’s true market value
• Appeal Preparation: Our experienced consultants will help you gather the necessary data and build a strong case to challenge any overvaluation
• Navigating the Appeals Process: We’ll guide you through both informal and formal appeals, ensuring that deadlines are met and your business gets the fair tax treatment it deserves

Don’t Wait to Act

The upcoming reassessments in New Castle and Sussex Counties will bring substantial changes to the commercial real estate landscape. For businesses, these reassessments could mean a significant increase in property tax liabilities if values have been understated for decades.

By preparing now and partnering with experts who understand the complexities of commercial real estate assessments, you can ensure that your business isn’t overburdened by an unfair tax increase. Contact our team of experts today to schedule a consultation and learn how we can help protect your business’s bottom line.