How to Reduce Your Tax Bill with a Commercial Appraisal

February 6, 2024

Do you feel that you are paying an unfair amount in property taxes? If you believe the market value of your commercial property is lower than what the local authorities think it is, you may be looking for a way to reduce your tax bill.

You may be able to appeal your current assessed value and provide evidence of your property's true value. A company that provides commercial appraisals in your area may be able to help. Here's what you need to know.

Appeal to the Local Tax Authority

Obtain the most recent assessment from the local tax authority. Once you have this documentation, you may be able to find clear evidence that things have changed. For example, if your neighborhood is now more run down, this could cause a decrease in value.

You may be able to simply appeal to the local tax authority for a new assessment if you can prove that the original assessment is no longer accurate. A better outcome is not guaranteed, but that shouldn’t necessarily stop your attempts.

Negotiate If You Can

In most cases though, chances are you will receive some pushback from the local tax authority. You may be able to negotiate a lower property value if you can gather evidence in your favor. For example, can you find documentation that other commercial properties in the area have seen a decrease in recent years?

If a pattern of decreasing values exists but your property is still an outlier, you may be able to get the authorities back out to take another look. If your property now has damage from a storm or something else, be sure to call attention to this.

Hire a Commercial Appraiser

If you are getting nowhere with the local tax authority, you may need to get professional help. A commercial appraiser can provide an unbiased and professional review of your entire property. You can present the same evidence to the appraiser but it will be an independent report in the end.

Issues that the local tax authority may not be aware of can come into focus during an appraisal by an outside firm.

For the best chances of success, select a commercial appraiser with decades of experience or just one that is known in the area. If this independent review shows that your property value appears to be less than the current assessment, you now have ammunition that can be to your benefit.

Provide the Report to the Tax Authority

Take your report from the commercial appraiser back to the tax authority and again raise your previous points. The documentation provided by the appraiser you hired might have more weight to it in the tax authority's eyes than whatever you were trying to present before on your own.

Keep in mind that this is a process that typically moves slowly, so be patient. But with the right evidence from the right appraiser, you may be able to get a lower assessment and a lower property tax bill.

Take Your Evidence to a Consultant or Attorney

But what if the tax authority still won't agree to your request even in the face of obvious evidence? In this situation, you may want to hire a professional consultant or real estate or tax attorney. A professional may be able to pressure the tax authority in ways you had not considered.

East Coast Appraisal Service has a longstanding reputation in the area surrounding New York, New York as an expert in commercial appraisals. As Certified Fiduciaries of the Office of Court Administration for the New York Supreme Court, we are often asked for our expertise in court-issued appraisals.

This outstanding reputation can work to your benefit if you believe your assessment is unfair. Contact us for a free quote and lower your tax bill.

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When someone inherits property—whether it’s real estate, stocks, or other assets—one of the most important (and often overlooked) tax concepts is the “step-up in basis.” An IRS step-up appraisal is the process used to determine the fair market value of an asset at the time of the original owner’s death. That value becomes the new tax basis for the heir. Understanding how this works can save—or cost—significant money when the asset is eventually sold. What Does “Step-Up in Basis” Mean? “Basis” is essentially what an asset is worth for tax purposes. Normally, if you buy something, your basis is what you paid for it. But when you inherit property, the IRS allows that basis to be “stepped up” to the asset’s fair market value as of the date of death. Example: A parent buys a home for $100,000 decades ago At the time of their passing, the home is worth $700,000 The heir’s new basis becomes $700,000—not $100,000 If the heir sells the home for $710,000, they only pay capital gains tax on $10,000—not $610,000. That’s the power of the step-up. What Is an IRS Step-Up Appraisal? An IRS step-up appraisal is a formal valuation that establishes the fair market value of an inherited asset as of a specific date—usually the date of death. For real estate, this means a licensed appraiser evaluates: Comparable sales (comps) Property condition Market trends at that time Location and unique characteristics The result is a retrospective appraisal , meaning it determines value as of a past date, not the current market. Why Is It Important? A step-up appraisal is critical for several reasons: 1. Reduces Capital Gains Taxes Without a proper appraisal, the IRS may assume a lower basis, increasing taxable gains when the asset is sold. 2. Provides Documentation If the IRS ever questions the reported value, a professional appraisal serves as defensible evidence. 3. Helps with Estate Planning and Reporting Executors and heirs need accurate values for estate filings and distribution decisions. When Do You Need One? You typically need a step-up appraisal when: You inherit real estate and plan to sell it The estate did not already establish a value for tax purposes Significant time has passed since the date of death There’s potential for IRS scrutiny (high-value assets) Even if you don’t plan to sell immediately, getting the appraisal early can prevent headaches later. Date of Death vs. Alternate Valuation Date Most step-up appraisals use the date of death as the valuation date. However, in some cases, the estate may elect an alternate valuation date (six months later), if it reduces estate taxes. This decision is usually made by the estate’s executor in consultation with tax professionals. What Makes a Good Step-Up Appraisal? Not all appraisals are equal—especially when dealing with the IRS. A reliable step-up appraisal should: Be completed by a state-licensed or certified appraiser Follow Uniform Standards of Professional Appraisal Practice (USPAP) Clearly state it is a retrospective appraisal Include strong comparable sales data from the relevant time period Be well-documented and defensible Common Mistakes to Avoid Using current market value instead of date-of-death value Relying on informal estimates (like Zillow) Waiting too long to gather historical data Failing to get an appraisal at all These missteps can lead to disputes or higher taxes. Final Thoughts An IRS step-up appraisal might not be the first thing on your mind after inheriting property, but it plays a major role in determining future tax liability. Getting it right can mean the difference between a manageable tax bill and a costly surprise. If you’ve inherited property—or expect to—it’s worth consulting with a qualified appraiser and tax advisor early in the process. A little diligence upfront can protect you financially down the road.