Intro to Exemptions and the Effects of COVID-19

In this edition of the RETC Podcast, Amish Gupta, Managing Partner at RETC and Tim Feagans, Director at RETC, cover various topics in Q&A format as it relates to exemptions on property taxes and how it could potentially assist property owners. The summary is provided below and the podcast can be heard in its entirety below.

What are the various types of exemptions?

Some are residential in nature and automatically renew. The most common type is residential which gives tax breaks on primary residences. The second is usually business related and provide incentives for certain types of business or actions. Typically on these, there are annual applications. One example is a freeport exemption which gives businesses relief on inventory that is usually shipped in and out of the jurisdiction. These are usually allowed for in industrial areas.

Separately, some states have a disaster relief exemption. Usually those are for properties affected by some type of natural disaster like a hurricane, tornado, or earthquake. There has been some discussion whether or not COVID qualifies as a disaster and thus property owners can benefit from the exemption.

What is the process for filing for an exemption?

Typically, a taxpayer completes an application, and the assessor either accepts or denies the application. In the case of denial, the applicant has the ability to appeal the denial through a formal protest hearing. If that does not suffice, there may be further recourse in the form of litigation. Each state and jurisdiction has its own unique set of steps involved, so it is best to do the research before applying.

How is COVID-19 going to affect the interpretation and application of the disaster exemption?

At this point, nothing definitive has occurred as it relates to COVID and any related property tax relief. Each state and jurisdiction will act differently depending on their own set of circumstances. Generally speaking, local governments and municipalities are facing vast budget shortfalls for 2020. If the federal government does not provide monetary support to the local governments, they will face pressure to increase property taxes. In this scenario, there is a good chance that millages will increase, and there will be reluctance to provide blanket-level exemptions. Having said that, they may provide relief to specific asset classes that have been hit harder than others (e.g. hotels, restaurants, etc.).

In conclusion, property owners should do research if they qualify for any exemptions. In the scenario that they do, applications are usually available online at the assessor’s website. It is highly recommended to get a professional like RETC involved if an owner is seeking a more complicated type of exemption such as COVID or Freeport.

For more information about how changes in property tax law can affect commercial real estate investing, contact us or visit our website.

RETC Group was recently acquired by Ryan, a leading global tax services and software provider and the largest Firm in the world dedicated exclusively to business taxes. The combination of RETC and Ryan creates the largest property tax team in the United States with the most local expertise of any provider. RETC’s existing clients will continue to receive the excellent service they have been receiving and will now have access to Ryan’s value-added services and tax-saving strategies across more than 50 global tax disciplines.

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