Rising property taxes present a complex challenge for owners and operators across all asset classes of Florida commercial real estate.

During times of broad economic fluctuations, a proactive tax strategy becomes essential for maintaining a competitive advantage and ensuring long-term profitability, said Jeff Nelson, managing partner with the Property Tax Alliance Group.

Fort Lauderdale-based PTAG is a boutique commercial property tax consulting firm dedicated to providing CRE taxpayers with strategies to navigate and mitigate property tax exposure in Florida's evolving markets. Nelson and PTAG partner Tim Hart walked Bisnow through some of the proactive strategies CRE owners should be taking this tax season.

Adapting To Markets

Nelson said the landscape of market dynamics appears to be changing rapidly in Florida.

This volatility underscores the importance of having agility and foresight in tax planning. Despite news of rising foreclosures, for example, PTAG has been engaged in more transaction discussions since interest rates appear to have leveled off, he said. However, with political uncertainty on the horizon, the landscape could change once again.

“A common expectation is more pressure will continue in light of this year's presidential election,” Nelson said. “While higher interest rates and rising insurance costs have devalued real estate last year, local assessors shifted their focus to rents. Their focus will shift again if interest rates drop, but we’ll be prepared regardless.”

Taking Proactive Measures To Pre-TRIM Notices

With Florida's Truth in Millage notices coming out in August, proactive CRE owners are already taking steps to minimize their tax liabilities. PTAG offers tailored guidance to ensure clients pay only what's necessary, safeguarding their investments against undue tax burdens, Nelson said.

One of the nuanced challenges in property tax management involves dealing with county appraisers. Hart cautioned against responding directly to their annual information requests, as this can inadvertently lead to higher tax assessments.

“Let your consultant or tax attorney steer these conversations,” he said. “This helps ensure that your financial interests are protected without compromising the integrity of your tax assessments.”

Hart said that the first quarter of the year is a crucial time to consult with tax agents and share important property data. By providing ledgers, rent rolls, deferred maintenance, capital expenditures and other property-specific data, owners empower their tax consultants to not only build a compelling case for lower assessments but to begin an informal dialogue with county appraisers, he said.

“The sooner we receive comprehensive data, the more opportunities exist to settle informally,” Hart said.

Building A 2024 Transaction Strategy 

In addition to helping its clients navigate the tax landscape, PTAG's program is designed to help clients stay more competitive in Florida's CRE market while pursuing new assets, Nelson said. Proactive oversight during acquisitions ensures assets are enrolled at the most advantageous tax basis, directly boosting net operating income compared to typical underwriting and enabling distinctive advantages in Florida's 2024 CRE landscape.

Proactive approaches involving the allocation of value components or entity transfers during the transaction stage can impact both transfer tax and property tax liability before closing, he said.

Tangible Personal Property Reporting

In addition to 2023 property taxes, tangible personal property tax filings are due by April 1. Nelson said PTAG ensures all furniture, fixtures and equipment are accurately reported and filed promptly to avoid penalties.

Elevating CRE Investment In 2024

As Florida's CRE landscape continues to evolve, partnering with a tax expert can optimize an investor’s tax strategy and improve their sustained investment profitability.

“By leveraging deep market insights, strategic data management and innovative transaction approaches, CRE investors can navigate the complexities of property tax management and secure a favorable market stance in the coming year,” Nelson said. “For those committed to not just weathering but thriving in Florida's competitive CRE environment, now is the time to redefine their property tax strategy.”

This article was produced in collaboration between Studio B and Property Tax Alliance Group. Bisnow news staff was not involved in the production of this content.

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