Real Property Tax Appeals for Properties Affected by Climate Change

by | Jan 22, 2025

As the effects of climate change continue to reshape our environment, the ability to adapt – both in terms of physical property management and navigating the complexities of tax law – will be crucial for protecting real estate investments in the years to come. Sayer Regan & Sayer’s proven real estate expertise will help keep you above rising tide of change…

In an era of increasing climate uncertainty, property owners face new challenges in managing their real estate investments. One often overlooked aspect is the impact of climate change on property taxes.

Valuation Shifts

Climate change is reshaping the landscape of real estate valuation, and consequently, property taxation. Coastal properties facing erosion, inland areas experiencing frequent flooding, and regions prone to wildfires are just a few examples of how climate change can dramatically alter a property’s worth. These changes can lead to discrepancies between assessed values and actual market values, potentially resulting in unfair tax burdens for property owners.

Impact on Property Tax Appeals

The process of appealing property taxes in light of climate change requires a nuanced understanding of both tax law and environmental factors. Property owners must be prepared to demonstrate how climate-related issues have affected their property’s value, which often involves gathering substantial evidence and expert testimony.

One key consideration in climate-related tax appeals is the concept of “highest and best use.” This principle, commonly used in property valuation, assumes that the land will be put to its most profitable use. However, climate change can significantly alter what constitutes the highest and best use of a property. For instance, a beachfront lot once prime for luxury home development may now be unsuitable for construction due to erosion and flooding risks. In such cases, property owners may have grounds to argue for a lower assessed value based on the diminished potential use of the land.

Another important factor is the impact of climate change on insurance costs. As certain areas become more prone to natural disasters, insurance premiums can skyrocket, effectively reducing the property’s net income potential and, by extension, its market value. This increased cost of ownership should be reflected in the property’s assessed value for tax purposes.

Document Everything

When preparing for a climate-related property tax appeal, documentation is key. Property owners should collect evidence such as:

  • Historical climate data showing changes in local weather patterns
  • Flood maps and projections from reputable sources
  • Reports from geologists or other earth scientists about local climate impacts
  • Appraisals that take into account climate-related risks
  • Comparable sales data for similarly affected properties
  • Documentation of increased insurance costs or coverage denials
  • Evidence of physical damage or necessary adaptations due to climate events

It’s also crucial to stay informed about local and state laws regarding property valuation and climate change. Some jurisdictions have begun to implement policies that address climate-related property devaluation, while others may be slower to adapt. Understanding the legal landscape can help property owners build stronger cases for their appeals.

Be Timely

Timing is another critical factor in property tax appeals. Most jurisdictions have specific windows during which appeals can be filed, and missing these deadlines can result in the loss of appeal rights for that tax year. Given the evolving nature of climate impacts, it may be necessary to file appeals more frequently than in the past to ensure that assessments accurately reflect current conditions.

While individual property owners can certainly pursue tax appeals on their own, the complexity of climate-related cases often warrants professional legal assistance. Sayer Regan & Thayer attorneys specializing in real estate tax law can provide valuable guidance on building a strong case, navigating the appeals process, and negotiating with tax authorities.

It is worth noting that successful climate-related tax appeals can have broader implications beyond individual property owners. As more properties receive adjusted valuations due to climate impacts, local governments may face decreased tax revenues. This may lead to policy changes or infrastructure investments aimed at mitigating climate risks to protect the tax base.

What Lies Ahead

Looking ahead, the intersection of climate change and property taxation is likely to become increasingly complex. As climate models improve and our understanding of long-term impacts grows, we may see more sophisticated methods of incorporating climate risk into property valuations. This could include the use of predictive analytics to assess future climate-related depreciation or the development of new valuation methods that explicitly account for climate resilience features.

As extreme weather events, rising sea levels, and other climate-related phenomena affect property values, it’s crucial for owners to understand their rights and options when it comes to real property tax appealsBy staying informed, gathering comprehensive evidence, and seeking expert legal guidance, property owners can ensure they’re not unfairly burdened by outdated or inaccurate property tax assessments.

Contact Sayer, Regan & Thayer for more information on this topic.