Industrial properties are assessed very much like most commercial properties. In 2003, the Municipal Property Assessment Corporation started using a new automated costing program to arrive at the cost of construction of your buildings. That cost is then depreciated to the current economic life of the structure. The assessor then completes a land analysis of all the industrial sales in the area and applies the land table to each individual property.
Some industrial properties are designed more as investment type properties and they are assessed using the income approach that is generally based on the net income of the property. Assessors generally send out income and expense requests to the property owners for this information that they are entitled to under Sections 11-13 of the Assessment Act. Although the property owner should comply with the request, it is important that they only give the assessor the information that is requested.
Almost all industrial property owners could benefit from a full time assessment consultant who could review their property assessment and taxes annually. Many larger companies have their own tax consultant on staff. However, recent trends have been to outsource this process to an outside consultant.
Industrial properties are the most vulnerable to economic changes that take affect in your local area or countrywide. These property types therefore have different issues that do not affect the other properties to the same latitude as they do industrial properties. For this reason, your assessment could be quite accurate one year and the next year may be out of line due to the economic changes that have occurred. Many times the assessment department have not considered local economic obsolescence or functionality of the building in this cost approach. A consultant can review this value to determine if appropriate allowances are required or have been used by the assessor.
Many times the assessor puts too high a land value on a certain industrial areas. Since this is a problem associated with all property owners in that area, there could be an advantage if all property owners in that area joined forces and hired one consultant to challenge this land valuation. Everyone in the area could then share the consultation fee. Few property owners take advantage of this relatively new concept and more should consider this approach to lowering their taxes.
If you require assistance with your industrial property taxes call 519 351-5405.