Each August Florida property owners receive a proposed tax bill. Florida law provides that a minimum of 25 days shall be given to object to the property assessment. You are not entitled to challenge the assessment at any other time of the year.

Much confusion exists as to how values are established. Collier County cannot send an appraiser out to each home so the county utilizes the “mass appraisal technique.” This is neither an art nor a science and often leads to inequitable results. Like the passenger sitting next to you on a plane, your neighbor’s property may be assessed completely different from yours and the two of you are paying completely different fares.

Most individuals are familiar with fee appraisals based on sales comparison or utilizing cost and income approaches where only one parcel is evaluated at a time. In contrast, mass appraisal values the entire county where market areas, neighborhoods, subdivisions and large groupings of similar properties are appraised at one time by adopting standard techniques and using uniform rates so that resultant appraised values are equitable for all properties within an acceptable statistical deviation.

Additional factors go into these formulas. First if land is involved it will be assessed a value based on the square footage of the lot. This value will take into consideration the price you paid, but more importantly factors in the prices your neighbors paid. A weight is given to each to establish a common value. Unfortunately, many times a property with a poor view will be assessed as much as one with a wide water view.

Another factor is the size as well as the age of the home. The mass appraisal technique is unable to distinguish whether you have vinyl, wood, tile or marble floors. You may have exquisite woodwork throughout with an awesome built in surround sound, however the appraisal cannot distinguish this.

If you live in a condominium, the purchase price of your unit plays a key role, but so does the price your neighbor paid as well as the price everyone paid for a two or three bedroom oceanfront unit along Gulf Shore Boulevard if you live in the area. As a result, many times buyers erroneously report sale for less than full purchase price. Unbeknownst to them their individual sale is only one of the many factors taken into consideration. This strategy has little impact on the assessment and it could result in unanticipated capital gain issues upon sale or insurance claim issues in the event of casualty.

So what is the best way to challenge your assessment? First know the rules assessments are governed by Florida Statues 193.011 and the assessed value is calculated based upon the property’s value as of January 1st of the tax year. Therefore, any sales which occurred after this date that may have a dramatic impact cannot be taken into consideration until the following year. For instance, if a number of sellers were under contract in November of 2009 and closed in January or February 2010 for a substantially lower price than your property is assessed this cannot come into play since the closing occurred after January 1st. Unfortunately like the Chicago Cubs you must “wait til next year.”

In establishing the criteria to value the property there are eight factors which must be taken into consideration to arrive at a “just valuation”

1. Present cash value which a willing buyer and willing seller would pay in an arms length transaction.

2. The highest and best use to which the property may be put to.

3. The location of the property.

4. The size (square footage or acreage) of property.

5. The cost of the improvements and present replacement value (based upon square footage).

6. The condition of the property.

7. The income of the property, if applicable.

8. The anticipated net proceeds of sale following a deduction of “usual and reasonable fees and costs of sale” exclusive of personal property.

The unwritten rule is that counties attempt to value your property at least 85% of the true market value as justified by the above factors.

If you elect to challenge your assessment you must pick up the form, pay the fee and file the form in person or it must be received no later than 5:00pm on the date provided on your proposed tax bill. Hearings are held the last week of September in the County Commission Chambers.

Before appearing at the hearing do the math. You are up against a team of well documented employees of the Property Appraiser’s Office whose job is to assure the Value Adjustment Board (which ironically consists of five paid county public servants, three from the County Commission and two from the School Board) that there are grounds to support the valuation given. Unless you have clear and convincing evidence that an error has been made your petition will be denied. The property appraiser’s office is very defensive of their values when their integrity is brought to question at a public forum.

An alternative approach if you believe an injustice exists is to call the property appraiser’s office after the assessment comes out but before the filing deadline. Politely point out the inequities with whatever evidence you can find to support your position and ask for reconsideration. Sometimes mistakes are made and if you approach the property appraiser’s office with honey rather than vinegar, my experience is they will document the file and make an adjustment over the phone right then and there. They will not make an adjustment based on sympathy however, if you have evidence to support your position they will work with you. Again, the biggest mistake property owners get confused over is that transactions from the present year (2010) cannot be taken into consideration.

I served on the Collier County School Board and hence was a member of the Value Adjustment Board for four consecutive years from 1991 through 1994. The law as well as people have not changed since. There you have it. An insider’s tip.