Can You Appeal Your Real Estate Taxes in 2020?

The COVID-19 pandemic has caused an extreme financial hardship on most, if not all, Missouri families. As such, many owners of real estate are investigating how best to reduce outstanding financial obligations and save resources wherever possible.

Given this crisis, one obvious area to investigate would be outstanding tax liability. The Internal Revenue Service has extended the filing deadline for federal income taxes from April 15, 2020 to July 15, 2020. However, what about real estate taxes, which are generally due on December 31 of each year? This is another area to investigate and quite possibly take timely and appropriate action.

Missouri reassesses all real estate every odd-numbered year (e.g. 2019, 2021, etc.).  In even- numbered years, such as 2020, local Missouri assessors normally allow their values to remain unchanged from the prior odd-numbered year (2019).

If you failed to file an appeal in 2019 on a timely basis, can you now appeal in 2020? The general answer is yes, you can appeal your real estate taxes in an even-numbered year (e.g., 2020). However, the assessor takes the position that the valuation for your property in 2020 will be based upon the fair market value of the property as of January 1, 2019.

The local assessor determines both the fair market value and the subclassification of all real property. Real property is assessed under a two-year cycle. The value placed on a property for an odd-numbered year is placed on the property for the next even-numbered year. However, the assessor has the right to increase the value in an even-numbered year due to recent construction.

The vast majority of real estate tax appeals are filed in odd-numbered years (e.g., 2019). However, if you happen to miss the filing deadline for 2019, the taxpayer is permitted to file a tax appeal in the following even-numbered year (2020), provided any reduction in the real estate valuation and subsequent real estate tax will be saved only for one year, not two.

Therefore, the number of real estate tax appeals in even-numbered years are drastically reduced, but still available to the taxpayer. The first question to determine is the market value of your real estate. A brief definition of market value is what the real property would bring when offered for sale by a willing seller to a willing buyer, without duress, obligation, or undue influence.

Once market value has been determined, the assessor calculates a percentage of that value to arrive at the assessed value. There are three separate classifications of real property, each applying a separate percentage to arrive at the assessed valuation: Residential (19%) Agricultural (12%) and Commercial (32%). Once the assessed valuation has been determined, the assessed valuation is generally multiplied by the tax rate (which is determined later in the year) to arrive at the actual annual real estate tax.

As a general rule, the local county assessor applies three methods to developing an estimate for market value. These three methods are the cost approach, market or sales comparison approach, and the income approach. If you feel that the county assessor has overvalued the fair market value of your real estate, you have the right to appeal the assessor valuation to the local County Board of Equalization on or before the second Monday in July.

Therefore, if you wish to appeal your valuation in 2020, all such real estate tax appeals must be filed on or before Monday, July 13, 2020. The local Board of Equalization is a three-member panel independent of the county assessor’s office.

Real estate tax appeals are generally heard by the Board of Equalization during the months of July and August. If the Board of Equalization refuses to reduce your valuation, you may appeal to the Missouri State Tax Commission within 30 days of receipt of the Board of Equalization decision or by September 30, whichever is later. Remember, the Missouri State Tax Commission will not hear your tax appeal unless a timely appeal was made to the local County Board of Equalization with an adverse ruling.

As stated above, since there will be a new reassessment in 2021 (the next odd-numbered year), any reduction this year would reduce your real estate taxes for 2020 only. However, given the difficult times presented by the COVID-19 outbreak, this may be something for taxpayers to now consider.

If you have any questions regarding your real estate valuation, please contact our office and arrange a time to speak with one of our real estate attorneys.

For additional COVID-19 related information, go to our Coronavirus/COVID-19 Resource Center.

Posted by Attorney William J. Bruin. Bruin is a member of Danna McKitrick’s real estate team. He primarily focuses on real estate and tax related transactional matters for his clients. He is an experienced transactional attorney and has handled many tax appeals both before the local Boards of Equalization and the Missouri State Tax Commission.

(c) AndreyPopov www.fotosearch.com