Despite the Federal Reserve’s wishful thinking in 2021, inflation has persisted to create an inflationary environment not seen in 40 years. While investors welcome recent cooling trends, the Fed has yet to achieve its 2 percent annual inflation target. For landlords, tenants and other commercial taxpayers, it’s unsurprising that many tax assessors have increased property tax values in response to inflation. In many jurisdictions, taxable property values have surged regardless of property type or actual market demand. Taxpayers should not accept higher tax assessments without scrutiny, however. Instead, they should review their assessments to ensure the assessor has considered all factors influencing the property’s value. Here are several trends for taxpayers to consider when reviewing property tax assessments and preparing to protest inflated valuations: Cost vs. value Many assessment officials use the cost approach in mass appraisals of real property for ad valorem tax purposes. Without careful application — including proper classification of improvements, adjustments for depreciation and obsolescence and land adjustments for size and shape differences — the cost approach can lead to assessments inconsistent with a jurisdiction’s market value standard. While construction costs generally rise over time, some increases may only be temporary. For example, during the COVID-19 …
