Tax Adjustment Strategies for Multifamily Apartment Buildings

Investor · Washington, DC · Member since 2015 · 4 posts · 0 votes

I have an (11) unit apartment building in Lakewood, OH, and I am trying to figure how to best approach re-negotiating with the county for lower taxes. The property was purchased at $335K and I am paying property taxes at just over $12K a year. When I look at properties in other locations that are valued much high, example being a place going for $1.5M plus in the Washington, D.C. area is paying $12K in property tax a year. I understand different areas have different tax rates and especially across state lines but I find it extremely hard to believe that an out skirt town of Cleveland, OH commands almost 5 times the amount of property tax.

What has worked for those that have successfully re-negotiated their property taxes on multifamily apartment buildings?

Thanks,

Trey

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Brian Adams

Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes

11y

Trey, I am using a property tax consultant to help me with my 200+ unit deal. They don't get paid unless they lower the tax and their fee is fixed.

You may want to engage the services of a professional to help you.

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Matthew Cole
Investor · Allen Park, MI · Member since 2014 · 98 posts · 36 votes
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You need to read up on how taxes are calculated based on SEV (state equalized value). What is this number currently for your apartment? How does that compare to your purchase price? How do these numbers compare to other apartment buildings in the same city? After you figure this out you can contact your city and get a hearing during certain times of the year. Don't use an example in Washington DC. It doesn't matter. Educate yourself on this and make a business case with the city on why they should be reassessed. FYI your paying about $1,100 a year per unit. That's pretty cheap in my opinion.
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Brian Adams
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
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Trey, I am using a property tax consultant to help me with my 200+ unit deal. They don't get paid unless they lower the tax and their fee is fixed.
You may want to engage the services of a professional to help you.
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Ian M.
Pittsburgh, PA · Member since 2012 · 140 posts · 38 votes
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@Trey Eaton, the other comment is accurate. You have to compare it to other similar buildings IN LAKEWOOD, not DC. Its apples and oranges and the city won't even consider your argument if you try it that way. I don't know necessarily how it compares to other buildings in Lakewood as I haven't done that exact analysis, but I do know that Lakewood's taxes are pretty high so you may not be able to get the reduction you are hoping for. Also, go to Cuyahoga county auditor's website and see what the county says your building is worth. If they number they have is less than the current market value, I wouldn't try to appeal as they will likely raise it. If they are assessing it at HIGHER than current market value, you MAY have a case. Good luck
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Travis Lloyd
Real Estate Broker · Fairfield, CT · Member since 2015 · 312 posts · 231 votes
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You cannot reduce the tax AMOUNT. Your city has a MIL rate at which it taxes property values. What you would be looking to decrease is your appraisal / assessment. Lookup the assessments of similar properties IN YOUR CITY! This is all public record. If they are lower than yours considerably, your city will have a process for contesting your assessment and seeking a re-evaluation.
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Timothy Murphy III
Real Estate Broker · Cleveland, OH · Member since 2012 · 771 posts · 252 votes
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@Trey Eaton
To lower the property taxes assessed to this property, you need to lower it's tax assessed value. Lakewood, Ohio is part of Cuyahoga County, so you file a Complaint Against the Valuation of Real Property with the Cuyahoga County Board of Revisions. Cuyahoga's BOR accepts complaints for the previous tax year starting January 1 and ending March 31. Unfortunately, you've missed the window to file this year, but in the first quarter of 2016 you can file a complaint against the property's valuation for the 2015 tax year.
Should you prevail on having your tax assessed value lowered, you'll receive a refund for the amount of taxes you overpaid on the previous year. Your property's tax assessed value will be adjusted to the new amount going forward. This new valuation will last until the property is scheduled for re-assessment. I believe Cuyahoga does this every 5 years, but I don't remember off the top of my head.
To prevail at the hearing you need to present evidence as to why your property's valuation should be modified. The two most common forms that such evidence takes is 1) a recent arms length transaction, or 2) an independent appraisal. Property owners may also testify as to their own opinion of the property's value. This is useful for smaller SFRs that are seeking a more modest valuation reduction since the expected tax savings don't justify extensive appraisal expenses. The BOR, however, is not required to accept that evidence and they sometimes refuse a valuation adjustment if the extent of the evidence is owner's testimony. For a property such as yours, the cost of hiring an appraiser to prepare a report and testify at the hearing is worth more consideration.
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
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http://www.aptcnet.com/ohio-property-tax-representative
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Account Closed
Investor · Cedar Bluff, AL · Member since 2015 · 83 posts · 17 votes
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Originally posted by @Brian Adams:

Trey, I am using a property tax consultant to help me with my 200+ unit deal. They don't get paid unless they lower the tax and their fee is fixed.
You may want to engage the services of a professional to help you.
I have done the same. Totally worth it.
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Oren K.
Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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I just went through this, successfully in Cuyagoga county and used the firm (no connection):
www.sdglegal.net
Ask for Robert Danzinger; good guy, knowledgeable very easy to deal with.
As previously posted, the MIL rate determines the amount of taxes paid based on the value of the property. To look up the current valuation of your property by Cuyahoga county, go to the web site:
http://gis.cuyahogacounty.us/mycuyahoga/faces/MyCu...
The process is fairly straight forward. You must apply during the Jan 1 - Mar 31 window. You will be given a hearing date during which you (or your representative) can present evidence regarding the actual value of the property. The board will issue a decision within a few weeks. There is a 30 day appeal period.
The best 'evidence' is a recent arms length transaction as there are multiple Ohio Supreme court precedents. An auction that was widely advertized (e.g. Auction.com) that had a reserve also fall within the precedents.
While no situation is guaranteed, some circumstances are very clear cut (e.g. arms length transaction). Most legal firms that specialize in this area work for a percentage but they will also generally work for a fixed fee. You have to assess which is better for yourself and if you go the fixed fee route, if you are willing to bare the risk if, for whatever reason, the ruling goes against you (i.e. you still have to pay)
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