With any purchase of real estate, there are many associated costs incident to ownership. You know that that assuming it isn’t just a vacant lot, you will have maintenance and other upkeep costs on the structures, and there will always be property tax.
If you have owned the property for a few years, you may have grown somewhat used to the expenses remaining somewhat stable. With the economy improving, you may be feeling more confident about your business and the future.
Your plans may include hiring of more staff and an expansion of your existing facilities, but there may be something you have not planned for, and that is a sudden property tax increase.
The good news this year is that residential and commercial real estate assessments in Boston have reached $110 billion. While this indicates the Boston real estate market is growing, owners of property could see significant increases to their property tax bills.
One Boston pub saw the value of its property increase by 81 percent, which could translate tens of thousands dollars in extra tax. While overall property values increasing is generally a good thing for all owners, it can cause difficulty for businesses and their cash flow.
If a valuation seems out of line with comparables, a challenge to the taxing authority may be necessary, but in a strong rising market, those challenges may be more difficult.
When starting a new business, part of your due diligence should include a forecast of expenses such as property tax, to allow you to plan for and mitigate increases should they occur.
Bostonglobe.com, “Boston real estate assessments eclipse $100 billion for first time,” Casey Ross, December 12, 2014