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The DMA Way

Property Tax Alert: Mecklenburg County, North Carolina Revaluation

by DMA Staff | Nov 15, 2018
DMA_Blog_Mecklenburg NC

Property owners in the Charlotte, NC area should be preparing now for the upcoming reappraisal that will be effective for the 2019 tax year. As you may be aware, new valuation notices are expected to be issued in mid-January. DMA is out in front of the situation and monitoring it closely, so we’ll be prepared to review the new proposed assessments as soon as they are issued.

Be our guest on December 11 at our Charlotte, NC Roundtable luncheon to discuss this reval issue with industry peers and DMA tax experts

The reason this is so important in North Carolina is because some jurisdictions only perform these reappraisals (or “revals”) once every eight years. This is an unusually long cycle compared to most of the country, and the new assessments will reflect significant changes in both the economy and individual markets. Taxpayers might recall the concern that surrounded the last Mecklenburg County reappraisal in 2011 – which was so severe that it resulted in a legislated “do-over” of the entire process. Moreover, the value that is assessed for 2019 will generally be locked in for the next eight years, meaning the impact on your future tax liabilities is substantial. Market values for most properties have certainly increased since the last reval; but present valuations are driven by investors “looking forward”, not backward. And this far into the 8+ year bull cycle, investors as of Jan 1, 2019 will have some degree of trepidation about the end of such a cycle, about the impact of rising interest rates, etc. It is imperative that these new tax assessment values not only be accurate in relation to Fair Market Value, but that they be “fair and equitable” when compared to similar properties throughout the jurisdiction. Thus, it’s important that these new assessments be carefully scrutinized by someone well-versed in assessment practices, as well as familiar with current market activity. Property taxes are not only one of the largest line items affecting cash flow, but they also have a material impact on the valuation of property for collateral underwriting or potential sale price in the future.

Time is of the essence for multiple reasons, not the least of which is that this initial notice of reappraisal will create a flurry of activity in Mecklenburg County. We expect most taxpayers will see an increase (from modest to dramatic), depending on the asset category and location. Upon initial mailing of reassessment notices, it is typical for thousands of appeals to be filed – as such, the assessing authorities are motivated to reconcile all legitimate issues, to address credible concerns and to resolve as many disputes as possible. Without question, this is the optimal time to impact change in the assessment for the next 8-year cycle. This consists of calling the assessor’s attention to unique nuances of your property, challenging factual errors in the assessment record card, drawing attention to functional or external obsolescence issues impacting your property, and/or providing other valuation-related evidence for their review and consideration. Typically, taxpayers must request an informal review within 30 days of the notice.

Thereafter, you will have the opportunity for a more formal appeal to the county-level Board of Equalization and Review (BOER). While this is certainly a productive and fair venue, it would be unwise to not take full advantage of the informal review process as well. Most assessors are receptive to credible and relevant information, and they will work cooperatively with the taxpayer to achieve fair and accurate assessments. Thus, it is highly recommended that you be prepared to review and evaluate the new assessment notices as soon as they are received, sometime between October and December of this year. Given the short window of opportunity for the first level of appeal, if you aren’t proactive in determining your property’s value and what an accurate assessment “should be” at present, then you may find yourself at a disadvantage once the notice is mailed (and the clock has already started ticking on your rights). Knowing that this event is coming, it is advisable to act now and eliminate the need for fire drills and the stress created by having to make decisions with a sense of urgency.

We should also mention that you are not necessarily precluded from appealing your assessment in future years, post-reval. However, practical experience indicates that both the assessment staff and the BOERs may be reluctant to grant significant changes in the middle of a reappraisal cycle. Whether accurate or not, failure to protest an initial assessment in the first year of the reval can be perceived as agreement with, or acceptance of, the county’s original appraisal. Additionally, you must always argue or prove the value “as of” the last reval period, meaning that in a future tax year you will be making a retroactive valuation case. While this is certainly possible, it can be more difficult – both for the appellant to substantiate and for the adjudicator to accept.

In conclusion, the 2019 tax year is an extremely critical year for property owners with assets in Mecklenburg County. It is the optimal time to evaluate the fairness of the new assessment and negotiate with the assessing authorities. Any success in obtaining a reduction or mitigating the amount of increase, if warranted, will impact the next eight years’ tax liabilities.

Be our guest on December 11 at our Charlotte, NC Roundtable luncheon to discuss this important reval issue with industry peers and DMA tax experts. Register here.

Request more information about the Mecklenburg County reval process and your appeal opportunity.

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