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"Apartment Property Tax Report - 1996"

Originally appeared inNew Mexico Apartment Report Vol. 3.2 - Q2í96
The process of understanding the methodology that one uses to calculate property taxes in New Mexico can be compared to the making of sausage, or law - all of them are ugly to watch, and none of them yield positive results. The following story will attempt to shed light on how the assessorís office calculates property valuations, what impact those valuations have on your bottom line, and how to improve your bottom line via tax protests. Value Year # of Apartment Units Sold Avg. Sales Price per Unit 1991 2,672 $24,946 1992 4,202 $28,586 Tax Year Value Year Ratio between Improvements and Total Avg. Tax per Unit Avg. Assessment per Unit 1994 1991 72% $154 $12,889 1995 1992 77% $216 $17,686 Non-Disclosure Pain=Profit? New Mexico is one of only a handful non-disclosure states in the country. At one time New Mexico real estate owners paid a stamp or transfer tax on every sale of properties, and a handful of these owners appealed to the state legislature to eliminate this transfer tax. The legislature did so, and made the disclosure of a sales price voluntarily in the state. Although most appraisers and brokers are frustrated with the amount of time that they must spend in determining the sales prices of comparable properties, the same frustration applies to each of the assessorís offices for the counties in the state of New Mexico. Believe it or not, this does yield some positive results for property owners. Take for instance the Bernalillo County (containing a majority of the Albuquerque MSA) vacant land parcels and other real estate in the county. One appraiser is responsible for the handling the valuations of some 3,000 different apartments in Albuquerque (yes he should be reviewing 15 apartments a day based on a 200 day work year). Each appraisers is responsible for confirming their own comparable sales, and only a handful keep personal databases on recent sales, utilizing outdated pre-windows personal computers. If the burden was not high enough, the assessors are required by law to reassess their valuations on each and every property on a 5 year cycle, with the last cycle being completed in 1995. It is not uncommon for property taxes to remain stable in-between cycles, and then surge during a reassessment year. Confused? Wait it gets better- by law, the property taxes are paid in arrears, and assessors are only allowed to use values as recent as two years prior to the current valuation year. So if you are paying your taxes in 1996, you are paying 1995 taxes which are based on 1993 values. Obviously, the assessors office is understaffed, and behind the technology curve. Facts not Fiction I am often asked what is a reasonable number to budget for property taxes and valuations, and rather give an approximation, my staff and I have spent weeks collecting the information to answer that question. The table on page four provides summary statistics that provide accurate information on some 55% of Albuquerque apartments, and 95% of those apartments containing 30 units or more. On average, the price per unit increased 137% from 1991 to 1992. Compare this information to sales figures for the same years: On average, the price per unit increased 114% from 1991 to 1992. Asessor's office. A couple dozen appraisers are tasked with tracking some 200,000 homes, apartments, retail centers, office buildings, va-suming all apartments would sale for the same average price per unit as other sales during that year, the assessors office average valuation is some 43% less than true market valuations. Although it would appear that the assessors office is catching up (given the 137% increase in valuations), 1995 was a reassessment year, and typically values peak higher during reassessment years than the years in between. To Protest or Not? I would review your current tax bill, and determine if your property is higher or lower than the above averages. If you believe that your bill is too high, but are unsure by how much, please do not hesitate to call me, and I will be glad to personally review your property. How Successful can you be in protesting? On average, I protest the property taxes for a handful of clients whose apartment real estate values in excess of $100M (according to the assessor). On average, I have decreased property taxes by 29% from the assessed value. Crystal Ball Time So what does the future hold for property taxes. To answer that question, we should review the past, or past values. The time period from 1990 to 1992 saw some of the lowest apartment sales in the last decade, and conversely the time period from 1994 to 1996 has witnessed some of the highest values ever. Given this information, I believe that it is reasonable to anticipate moderate increase in valuation for 1997 taxes, and a substation increase for 1998, 1999, and the year 2000. All of above information has been culled from the private Database of Todd Clarke CCIM, with access to public records.


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by Todd Clarke CCIM (www.nmcomreal.com/nmcomreal)
 
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