Property Tax Due Diligence: 3 Essential Steps for Land Asset Managers

How effectively you manage property taxes has a significant impact on the profitability of a land investment. Despite this, many asset managers overlook it until it’s too late. In this post, we break down three steps for managing property taxes on large land holdings.

Land asset management companies with land holdings are responsible for paying state and local property taxes. But knowing how much you owe – and when it’s all due – can be complex.

When you hold hundreds of thousands or even millions of acres, your land can easily stretch across multiple states and municipalities. And each will have their own return dates, laws and tax rates. A few missed deadlines, underpayments or overpayments can hurt profitability, as well as investor confidence.

So, if you want to stay on top of your property taxes and protect profitability, follow these three steps.

Step #1: Technology Adoption

Property taxes are much easier to manage when they’re implemented into built out in state-of-the-art software. Because of this, land asset managers are increasingly turning to property tax management solutions to make the process easier.

Property tax software providers like Orbis use historical property and parcel data to configure a dedicated, secure portal for your taxes. This provides a digital record of your scanned bills and status of every tax deadline.

Options for more advanced systems  offer analytics capabilities to analyze your tax data and benchmark it against historical data. And customizable dashboard and reporting make it easy to catch red flags and stay on top of payments.

Step #2: Administrative Support

Managing property tax payments for hundreds of parcels takes countless hours of administrative work. This is work property tax managers will gladly help you with, saving you valuable time and improving accuracy by outsourcing and automating resource-heavy tasks.

First, you’ll send your tax bills as you receive them to your tax administration manager. They’ll then upload and process them in your online portal. Next, the solution provider will analyze the bill for discrepancies and notify accounts payable departments of check requests.

While this process may sound simple, it can actually add up to dozens or even hundreds of hours of administrative work – all of which would have fallen on your team to manage. But outsourcing to a team of experts means you can count on payments being processed accurately and on time.

This has a number of benefits:

• Prevents overpayment
• Prevents late fees and interest
• Keeps you up to date on new laws and regulations
• Identifies and resolves errors before it’s too late
• Automates labor-intensive, error-prone manual processes
• Saves valuable time for your team

Step #3: GIS Analysis

Because property taxes are based on land boundaries, it can be very helpful to analyze your taxes against a literal map of your land.

GIS (geographic information system) technology uses spatial data points, lines and polygons to represent information about the Earth at a specific space in time.

One of the most powerful features GIS offers land asset managers is the ability to map the boundaries of a transaction against the actual legal boundaries of the property, allowing for visualization into their property taxes against the corresponding land boundaries. This helps spot discrepancies that would otherwise cause overpayments or worse— not paying for something that you should have.

For example, if the county assessor is charging you property tax for 100 acres, but the legal deed and GIS shows that you only own 95 acres, you can appeal to have the bill reduced

And that’s just an example for a small property. For land holdings in the hundreds of thousands of acres, GIS- powered property management can help you find massive tax savings.

Lastly, it can help you resolve issues that arise from properties spanning multiple jurisdictions. For example, if you own a large property that’s in two counties, GIS could help you identify acreage that’s being taxed by both jurisdictions. You can then address this issue and reduce your bill and avoid overpaying.

Conclusion

Staying on top of property taxes is a tough yet critical part of ensuring investment profitability. By following these steps and leveraging technology, you’ll be able to protect your investments and ensure proper tax management.