Property Tax Assessment Appeals
Commercial Property Examples
How Commercial Property Owners Can Win by Filing a 2027 Property Tax Assessment Appeal.
A lower common level ratio (CLR) will go into effect in Allegheny County for tax year 2027, bringing the potential for major tax savings to commercial property owners — and a short window to take advantage of it.
Allegheny County’s common level ratio (“CLR”) will drop considerably to 49.3% for 2027. Allegheny County’s CLR is the factor used to convert a property’s market value into assessed value. Property taxes are based on assessed value. Over the last several years, the CLR has come down significantly from 86.2% in 2021.
However, assessed values will not automatically be adjusted by the new 49.3% CLR. Property owners must file a 2027 tax assessment appeal to get the benefit of the change in the ratio.
To illustrate, here are just two examples on how a property’s assessed value can change from “fair” to “over-assessed” over time.
Example 1:
Existing Commercial Property Owner - Why Your Tax Assessment May No Longer Be Fair
In 2020, ABC Company purchased a commercial property for $2,000,000 (the “Property”). Based on that sale price, the county set the property’s assessed value at $1,724,000 based on the 2021 Common Level Ration (CLR) at that time of 86.2%. That is the amount ABC Company will have to pay property taxes on.
However, for 2027, the Property will remain assessed at $1,724,000, unless ABC files a tax assessment appeal. In 2027, that assessed value of $1,724,000 would mean that the Property is being taxed as though it is currently worth $3,497,000 (based on the 49.3% CLR). If the Property is valued less than this figure, ABC Company is very likely paying a disproportionally high amount of real estate taxes. In this case, ABC should file a tax assessment appeal to reduce its property taxes. Commercial properties are valued very differently from residential properties, particularly if they are income producing properties.
Example 2:
New Purchaser Stuck with an Outdated Assessment
In 2023, XYZ Company purchased the Property for $2,500,000 and that is still the fair market value heading into 2027.
However, even though the Property has gone up in value from $2,000,000 in 2020 to 2027, its assessed value should drop from $1,724,000 to $1,232,500 based on the new 49.3% CLR. This means that XYZ Company may also be able to argue for other market values based on various methods of valuation. However, the County will not automatically make this adjustment. Because lowering assessments reduces tax revenues, no taxing authority will initiate this change. The property owner may also be able to argue for other market values depending various methods of valuation. Unless XYZ Company files a 2027 tax assessment appeal, the Property’s assessed value will remain at $1,724,000, and XYZ Company will be overtaxed.
Making the Decision That’s Best for You
Meyer, Unkovic & Scott LLP has substantial experience representing commercial, industrial, income producing, and residential property owners in handling tax assessment appeals of all property types. For more information about tax assessment appeals, please contact Jason Yarbrough at 412-456-2592 or [email protected]. He can help you evaluate whether your property can benefit from a property tax assessment appeal.
Jason M. Yarbrough
Partner
Jason M. Yarbrough is a Partner and Chair of the firm’s Real Estate Litigation Section, Co-Chair of the firm’s Summer Associate Program, and a member of the firm’s Construction Law, Creditors’ Rights & Bankruptcy, Energy, Utilities & Mineral Rights and Litigation and Dispute Resolution Practice Groups.
Jason frequently represents clients in complex commercial, real estate and construction disputes. His real estate litigation practice includes disputes involving the acquisition and development of real property, landlord tenant disputes, property rights, property tax assessment appeals and exemption proceedings, land use and title disputes, partition actions and foreclosure proceedings. In his construction practice, Jason represents owners, developers, contractors, architects, and engineers in disputes arising out of both public and private construction projects. He has litigated claims in state and federal courts, and against state agencies and the federal government.
