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| How to Get Your Property Taxes Reduced |
Submitted by:
Tip Hero 07/23/2008 4:43 AM
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Unfortunately property values have been dropping significantly in some places which begs the question: Shouldn't my property taxes be dropping as well? Nationally prices are dropping at a 15% annualized rate according to the Case-Shiller real estate index. Some house values in areas that saw huge waves of speculative buying have dropped 30-40%. Property tax assessments are one of those areas I've never looked into. I was curious to learn how they come up with property assessments, and how someone might challenge their assessment and ultimately lower their property taxes. I'll also show you a quick and easy way to check for errors in your property tax information online.
How do they come up with a value for my property?
Most tax authorities do not send property appraisers door-to-door, tape measure in hand to carefully measure the square footage of each room in your house. That's because the process would be too time consuming and expensive. Tax authorities have different ways of calculating a property's assessed value which is why it is important to learn how your local tax authority makes the calculation.
For most tax authorities they try to come up with a fair market value for a property by determining how much that property would be sold for in an arms length transaction. In my county they do this by looking at the size of the lot, the square footage of the floor plan the builder filed with the county when they built the home, plus any building permits that added to the square footage of the home such as an extension. Your local tax authority has all this information stored in what is typically known as a property card. These are public records that you and anyone else can review. They then takes this information and look at comparable real estate transactions of similar homes in your area, much like a real estate agent does when they determine what price to list your home at.
Learn the Law
As mentioned above tax authorities have a myriad of ways they assess the value of properties within their district. In my county they take the lower of real market value or a maximum assessed value. Voters in my state also instituted a law that caps the growth of property taxes to 3% a year. I highly recommend researching how your tax authority assesses values. You can find these by doing a simple web search or calling your local county offices. I also came across a site lowtaxrate.com which gave some state by state information on how property taxes are assessed.
Don't be intimidated by looking up tax laws, a lot of it is pretty easy to understand and you can always call the county to have them explain parts you don’t understand.
Check for Errors
Mistakes do happen. Maybe it's a clerk that accidentally puts your home down as having four bedrooms instead of two. Maybe the square footage is listed on your property card as 2,500 when in fact it’s only 2,000.
Check Comparables
You'll also want to make sure that your property's tax assessment is inline with similar properties in your neighborhood. If you see similar homes in your neighborhood with a much lower tax assessment that's a red flag that you should look into further.
Do a Quick Check Online
One way to do a quick check of what is on file for your property at the local tax authority is to check sites like Zillow.com and Trulia.com which have built their services by taking data from public records from local tax authorities. Please keep in mind that this may not be what is exactly on file so it's always a good idea to check directly with your tax authority. Checking these online services is a good way to do a quick check and it's totally free.
Zillow: When I looked up properties in my neighborhood on Zillow they included tax information such as total assessed value and total property tax paid. They also included the square footage and number of bedrooms and baths of properties.
Trulia: I also did a search on Trulia and they included information on square footage, number of bedrooms and baths as well as lot size.
If you find that the data on file with Zillow and Trulia are incorrect that is a pretty good sign that the data on your property card at your local tax authority is incorrect as well.
What to do if there is an error?
If you do find an error, or find that your property is being assessed at a level much higher than comparable properties here are a few steps to consider:
1. Read up on the laws governing property assessment. Call the tax authority with anything you don't understand from the tax code without delving into the details of your case. Try and get as good a handle on the tax rules as possible.
2. Build your case, gather as much evidence as possible such as photos, floor plans, or any other information that supports your claim.
3. Try to setup a time to talk with a property assessor to go over your case. Nearly all tax authorities have a formal appeals process but it's often a good idea to try and talk with an assessor beforehand. If it's a pretty obvious error in the property records they can make the appeals process go a lot smoother.
4. As mentioned above each tax authority has some sort of appeals process. Call your local authority to inquire about the process and associated fees involved. I've read many cases were homeowners represented themselves if the appeal is dealing with a basic error of fact.
If your appeal is complex or involves a significant amount of money you probably want to talk with a tax attorney that specializes in property tax appeals before talking with your tax authority about the details of your claim.
What to do if my property's value has dropped significantly?
As mentioned in the intro, house values have dropped significantly over the past twelve months. Getting your property's tax assessment adjusted based on a market decline is a little trickier than having the tax assessor adjust an error on your property card. This is because property downturns affect many properties within a tax district and so the issue is more systemic. Cities, counties, states depend on property taxes to fund education, police, fire, and other services. Tax districts have budgets they try to hit and if there was a drop in assessed values across the board they would probably just raise rates to compensate for a lower assessed values. However, I've read a few cases were homeowners were able to get their assessment reduced due to market declines. It's definitely worth a call to your local tax authority to discuss the issue. You won't be the first person calling them this year about declining real estate prices.
Photo Credits: kevinmarsh |
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