Understanding Vacancy Relief
Vacancy relief is intended to provide financial relief to property owners experiencing distress or vacancies at their properties, particularly in the wake of heightened vacancies since the pandemic. While it is ideally meant for temporary vacancies, some property owners have exploited this tool for extended periods, prompting legislative efforts to impose limits and to ensure that genuine efforts are being made to bring properties back into productive use.
Vacancy relief offers a temporary reduction in the assessed value of a building while leaving the land value unchanged. Property owners must reapply annually, demonstrating their efforts to lease the property. Assessing officials scrutinize various factors, such as hiring a broker, posting “for lease” signage, and showing tenant interest through letters of intent and showings.
Properties Qualifying for Vacancy Relief
Generally, residential properties do not qualify for vacancy relief. While previous administrations sometimes allowed relief for residential properties undergoing significant renovations, the current administration is much less lenient in granting such exemptions. As a result, vacancy relief predominantly applies to commercial and industrial properties, including strip centers, malls, and office buildings.
In urban areas like downtown Chicago, office buildings currently experience at least 25% vacancy rates, which emphasizes the necessity of vacancy relief for struggling property owners.
Steps for Property Owners Seeking Vacancy Relief
When considering applying for vacancy relief, property owners should prepare by compiling relevant data. Assessing officials may require two years of vacancy data, including previous rent rolls and documentation of leasing efforts. This includes contracts with brokers, photos of listings, and affidavits detailing showings made by potential tenants.
Deadlines and Filing Requirements
It’s crucial for property owners to understand the filing timeline for vacancy relief applications. Historically, the interpretation of vacancy relief rulings has shifted over time, so consulting with a knowledgeable attorney can help navigate the complexities of the process.
If an application is denied, it can be challenging to appeal, as there is no statutory guarantee of entitlement to vacancy relief. Property owners often mistakenly assume they are automatically entitled to this type of relief, leading to failure to meet the burden of proof at the higher levels of appeal.
Common Reasons for Application Denials
Applications for vacancy relief are frequently denied if assessing officials doubt the property owner’s genuine efforts to lease the vacant space. Property owners investing in multiple properties for long-term holds and waiting for higher market prices may also find their applications rejected if officials discern that they are not actively leasing or trying to sell. Property owners who paid more than the assessor’s market value for property tax purposes are unlikely to succeed on a vacancy appeal.
Strengthening Your Case for Vacancy Relief
To bolster the chances of success, property owners should provide substantial evidence of their efforts to lease the property. This includes thorough documentation of outreach and significant actions taken to attract tenants.
Local Tax Authorities’ Perspectives on Vacancy Relief
Local tax authorities view vacancy relief through the lens of public policy, emphasizing the need for vibrant neighborhoods with occupied storefronts. Some politicians oppose vacancy relief policies, arguing against incentives that allow properties to remain vacant. In many states, vacancy relief does not exist at all.
Maximizing Tax Savings Through Strategic Management
While vacancy relief can offer temporary financial relief, property owners are better off by minimizing vacancy altogether. Strategies include assessing rental prices, offering tenant incentives, and ensuring professional management of the property. Collaborating with professional brokers can also improve the chances of successfully filling vacant spaces.
Conclusion
In conclusion, being proactive and strategic in managing properties can reduce reliance on vacancy relief. For further information and guidance, please visit https://thedevinelawgroup.com. Thank you for joining us on Devine Intervention, and remember to like, subscribe, and leave a review on your favorite platform.