Reassessment

In most places, local authorities tax property by multiplying an assessed value by a rate. The assessed value is the authority's estimate of what the property is worth for tax purposes.

Over time, property values change, so authorities periodically reassess to keep the tax base in line with the market. How often this happens depends on local law.

Some areas reassess every year, some every few years and some only when ownership changes or major building work is done. A reassessment after a sale can lead to a sharp jump in the tax bill for a new owner, which is a point buyers often overlook.

For a business, a reassessment changes occupancy costs, cash flow and the value of a property portfolio. Finance teams should budget for the possibility, particularly after buying or developing a site.

Landlords may pass the increase on to tenants under lease terms, so tenants should check how their leases handle tax rises. Property owners usually have the right to appeal if they think the new value is too high.

The appeal normally needs evidence, such as recent sales of similar properties or an independent valuation, and must be filed before a deadline. Missing the deadline can mean paying the higher bill for another year.

Reassessment also applies outside property. A tax authority can reassess an income tax or sales tax return after an audit, adding tax, interest and sometimes penalties.

The common thread is a formal review that replaces an earlier figure with a revised one. It is wise to keep records that support the value you believe is right.

These include purchase documents, building costs, rental income and photographs of any damage or defects that lower the value. When an assessment arrives, comparing it with these records quickly shows whether an appeal is worthwhile.