By: Mitch Wilson, Senior Manager – Property Tax
Property Assessment in Maryland is a function by the Maryland State Department of Assessment and Taxation (SDAT) which has an office in all 23 Counties as well as the City of Baltimore. Properties in Maryland are reassessed every three years, and each County typically contains three reassessment regions while reassessing a different region each year. For a property being reassessed, the County (or City of Baltimore) SDAT Office will issue new Assessment Notices in the month of December preceding the year being reassessed. The proposed new assessment, if representing an increase over the prior year, will see the assessment increase via a Phase-In for the first two years of the new reassessment cycle before the full value is fully phased-in for the final year of the 3-Year cycle.
Invoke Tax Partners has a longstanding history with the Maryland SDAT and has helped clients in a wide variety of industries lower their reassessment valuations during all phases of the appeal process. We recommend beginning your appeal at the Supervisor’s level– the first level of reassessment appeal. Commercial property owners may appeal the proposed new assessment within 45 days of the issuance of the reassessment notice (typically by a specific day in the second full week of February) to SDAT as a Supervisor’s Level reassessment appeal. This appeal, once filed, will then have a hearing scheduled with a Commercial Assessor with SDAT sometime in the Spring or early Summer. Prior to Covid, Maryland commercial real estate owners had the option of a written appeal, a telephone hearing, or an in-person hearing. However, in-person hearings with SDAT still have not been reinstated out of an abundance of caution and health safety. Once the hearing has been held with SDAT with evidence being exchanged, a revised decision and new value notice will be issued. We find that often property owners are able to obtain substantial reassessment value reductions at this level and do not need to proceed to higher levels of appeal, however, our approach to appeals encompasses all levels of SDAT board appeals should hearings require further proceeding.
The next level of appeal to the jurisdiction’s Property Tax Assessment Appeal Board (PTAAB) is due within thirty (30) days of the SDAT 1st Level Appeal Decision issuance. Most PTAAB’s will schedule in-person hearings in mid-Summer into the Fall, though some of the larger Counties – such as Prince George’s Co, is still roughly two years behind in its hearing schedule due to the PTAAB in that county being closed during the pandemic. Once the more formal PTAAB hearing is held, another decision notice will be issued. Invoke obtains many sizable assessment reductions for our clients at PTAABs around the State. Because of immense delays in Maryland Property Tax Assessment Appeal Board hearings, it is imperative that commercial real estate owners and investors in Maryland are structuring their reassessment appeals in a way that maximizes their opportunity to achieve value reductions at the Supervisor level. This often requires this assistance of an experienced property tax professional.
The final evidentiary level of appeal form is to be sent to the Maryland Tax Court (MTC) within thirty (30) days of the issuance of the PTAAB decision. Of note, the MTC appeal level is the first portion of the appeal process that requires legal counsel. Invoke has multiple partners it recommends to its clients and has worked with at the MTC very successfully. Appeal of the MTC determination may be made to the Circuit Court to challenge if the MTC made an error as a matter of Maryland Law – which occurs very infrequently. We highly recommend partnership with an experienced property tax firm to recommend the right legal counsel for MTC level hearings, as much like commercial real estate, law firms are not one size fits all for certain asset classes and Counties in Maryland.
In addition to initiating an Assessment Appeal in the year of a commercial property reassessment, there are two additional ways in which a property may be appealed outside of its normal reassessment year appeal:
First, in either the second or third and final year of a property’s cycle, a Petition for Review may be filed on or before the first business day following January 1, for the next upcoming taxable year starting July 1. Thus, for a property that was either reassessed for January 1, 2022, or January 1, 2023, a Petition for Review Appeal may be filed by roughly January 2, 2024, for the January 1, 2024 assessment. Petition for Review appeals, once filed, will then be scheduled for a typical Supervisor Level appeal hearing (SDAT level) and evidence will be exchanged in the same way as with a Reassessment Appeal, followed by the same requirements for an additional appeal to the County (or City of Baltimore) PTAAB and then to the MTC.
The second alternative type of an assessment appeal outside of a ‘normal’ reassessment appeal filing, is a New Owner Appeal, whereby if a property was transferred to the new owner between January 1 and June 30, a New Owner Appeal filing may be filed on or before 60 days from the date of transfer. Of note, SDAT has defined “Transferred” as the date the instrument that gave the current entity ownership of the property as being recorded locally with the County (or City of Baltimore), unless the new owner is able to submit copies of some other instrument evidencing a different transfer date. Once a New Owner Appeal filing has been made with SDAT, the normal timeline of SDAT Supervisor Level hearing and then PTAAB, followed by MTC ensues. Invoke Tax Partners recently achieved significant tax savings for one of its clients that had acquired a commercial property in MD in early 2022 via a New Owner Appeal. Invoke Tax Partners strongly recommends filing a New Owner Appeal upon acquisition of a new commercial property in Maryland and recommends performing a comprehensive valuation review with our experts to determine value benchmarks upon filing the appeal.
We are expecting our clients to see continuing double-digit percentage increases in their newly assessed values and are relying heavily on the expertise of our dedicated Maryland property tax consultants to assist in navigating the complexities of the reassessment appeal process, particularly with post-COVID delays. With the usual complexities of the Maryland reassessment cycle already at play, it is imperative to partner with our experts to develop an appeal strategy custom to the timing, circumstances, and appeal type for your entire Maryland portfolio. Invoke Tax Partners recommends every Maryland property owned by our clients be thoroughly reviewed each year by an expert property tax consultant. Oftentimes, particularly in times of significant uncertainty such as a pandemic or a potential impeding recession, Invoke is able to obtain increased assessment reductions during the property’s reassessment cycle.
It should be noted that a municipality’s BOAA formal filing deadline is State-mandated, and no extensions are available. Contact Invoke Tax Partners with assistance in establishing a strategic reassessment appeal for all commercial properties located in Maryland. Our process begins immediately, starting with reviewing our client’s MD properties in November and December for either a Petition for Review filing for 2024 by January 2, 2024, or Reassessment Appeal by the second week of February. To ensure your appeal strategy is optimized for maximum savings, contact our Mid-Atlantic property tax office today.