The $10,000 Property Tax Problem

Property taxes can seem outrageous, and sometimes actually are!  I certainly thought so when looking at a notice from the county awhile back on a property I had purchased.  There had to be a mistake in the assessed value. It was way too high. Where did they get that number?

The Realtor who assisted on the purchase told me to appeal the assessments as soon as we closed. Good advice, except for one problem. I didn’t know how to go about it.

So first, I procrastinated. Isn’t that the usual response when you encounter the unknown? Sure, I googled it, but it seemed complicated. I didn’t know how to prepare my case to be sure I won. It seemed like a lot of work and I didn’t have time. As a result, many months passed with no action on my part.

The assessed property was a mixed-use building on 24th Street and Dupont Avenue S. in Minneapolis. It had a convenience store and a hair dresser on the lower level and five apartments upstairs. It was an old building that needed work, and we had purchased it because it came with an upside of a vacant lot next door that could be developed.  After trying to figure that out, truth is, it was all complicated… and I was in over my head.

Back to the tax assessment.  I ran into someone who had successfully lowered his property taxes and he walked me through the process. Yes, I could get this done. I followed the procedures, filled out all the papers, provided the comparable properties and tax values, with the help of a Realtor. Basically, I did the work to back up my argument as to why the taxes should be significantly lower.  There was a hearing several months later and then I was notified.

I won the case! The assessed value of the property was lowered, resulting in the taxes being reduced by over $10,000 a year! Wow! And along with that the approval was for the prior year, when I had filed for it. Because I had paid the taxes when they were due, I could now expect a refund – GREAT NEWS!

Now this is where it got ugly! The whole process had taken almost a year and during that time we sold the building. The county AUTOMATICALLY sent the refund check to the current owner of the property. Hmmm.

Of course, the new owners deposited the check, and were likely very happy to receive the money. I attempted to investigate the situation with the title company, because isn’t this the kind of thing they are supposed to protect us from when they provide title opinions?  Shouldn’t they have figured all of this out? Unfortunately, another bump in the road: that title company had gone out of business due to some sort of ownership issues. My contact tried to help but to no avail. I contacted the new owner but no cooperation there.

So, I had to make a decision.  Hire an attorney and spend most of the $10,000 trying to recover that amount, or chalk it up to LESSON LEARNED. I chose the latter. Throughout my career I’ve learned to not focus on fighting or expending negative energy.  Just move on, create something new, and spend time and energy figuring out how to create $10,000 in income instead.

Real estate investing can be very tricky. You may think you have it all figured out and then something unforeseen happens. You can be better prepared if you know more about the process of reducing the assessed value on a real estate investment of yours before it happens.

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