COVID-19’s Effect on Real Property Assessments
As we begin 2021, new commercial real estate property values will soon be issued by assessors in many states, with limited time to file appeals. There are three approaches to value in this analysis: the cost approach, the comparable sales approach, and the income approach to value. Due to the unusual circumstances related to COVID-19, it may be worthwhile to look at your specific situation in the overall commercial real estate market.
For income-producing properties, multiple factors may affect your 2021 value:
- Have you had decreased income due to tenants’ inability to pay?
- Have you lost tenants resulting in excessive vacancies?
- Do you have deferred maintenance due to inability to make repairs?
- How is the overall commercial real estate market in your area?
BKD’s state and local tax group can assist in reviewing the new assessment to help identify overvaluation. A full analysis of your property value includes an evaluation of your income and expenses, rent rolls, and prospects for the future. BKD also will examine sales of similar buildings in your specific market and the physical characteristics of your property.
To begin our analysis, the following information is required:
- Copy of the most recent assessment notice or tax bill
- Building description, including the year built, size (square footage), use, and property condition
To learn more about BKD’s real estate assessment review services, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.