Can a commercial property tax assessment be reduced on appeal if the purchase price exceeds the assessment? Conventional wisdom indicates that a buyer will likely not qualify for an assessment reduction if they have paid more than the assessment. However, a recent Skoloff & Wolfe, P.C. case in Florida demonstrates that such an appeal can be successful if the circumstances are right.

The Role of Property Performance in a Property Tax Assessment Reduction

A Skoloff & Wolfe, P.C. client had purchased an active adult community in South Florida for upwards of $70M. The property was newly built and stabilized, and the client planned to increase the rent and maintain the community as a Class A facility. Unfortunately, the property did not perform as anticipated. It sustained a very high vacancy rate, leaving the client under significant pressure to cover expenses. 

The property had been assessed at approximately $60M, so the client had paid well over the assessment and was doubtful that they could achieve an assessment reduction. Would they be entitled to any property tax relief?

“We advised them that, despite the fact that purchase price can be a good indication of value, based on the performance of the property, we thought we could support a material reduction in the assessment,” said David Wolfe, Co-Managing Partner of Skoloff & Wolfe, P.C. “This would allow us to reposition the property, potentially renegotiate their debt, and save the asset.”

Analysis and Advocacy Result in a Successful Property Tax Appeal in Florida

Skoloff & Wolfe, P.C., together with local counsel Brendan Lynch of the Lowndes Law Firm in Orlando, successfully appealed the property, settling at only 57% of the recent purchase price. Our firms demonstrated that the property’s value should be based on factors not previously considered, including its deed restrictions. The firms also provided credible internal analysis to the Assessor, saving the client from the additional costs of an appraisal report. 

Assessment Reduction and Multi-Year Resolution

We were able to achieve a multi-year resolution, reducing the property tax assessment by 43% in 2023 and 33% in 2024.* Additionally, the settlement was reached at the administrative level, without going to court. By settling via the Value Adjustment Board, the attorneys achieved an exceptionally speedy resolution. Getting a multi-year settlement is uncommon in Florida, but was in both parties’ best interests. So, despite the relatively short time from the purchase in 2022, the assessment was reduced by over $20M, a steep discount to the purchase price.

Though assessment reductions are not typically obtainable when a purchase price exceeds the assessment, this case is a good example of how relief is sometimes achievable. Skoloff & Wolfe, P.C. was able to analyze the income at the property to determine that material relief was available in this instance. Taxpayers whose properties are struggling following their acquisitions should be mindful that this type of relief can be achieved, even when their purchase prices significantly exceed their assessments.

Contact us to review your commercial real estate holdings and to discuss potential relief.

Skoloff & Wolfe, P.C. is well-versed in the area of property tax law. The Tax Department has litigated the value of virtually every type of commercial, industrial, and multi-family property. Our attorneys also frequently counsel clients regarding property tax exemption matters, long-term abatements, and PILOTs. Our clients include developers, management companies, financial institutions, REITs, hospitals, universities, religious institutions, private equity firms, and insurance companies.

*Results may vary depending on your particular facts and legal circumstances.