Home prices have been in decline since the housing bubble burst several years ago. Yet the tax assessed values of homes hasn’t moved as drastically. The truth is if you’ve been living in your home for a significant amount of time and your neighborhood or city has been hit hard with tanking real estate values, you are probably paying too much in property taxes. Wouldn’t you like to do something about that?
Photo by danielmoyle via Flickr
How to Reduce Your Property Taxes
Your specific state and city will have its own rules on fighting for a lower property tax assessment, but these steps are pretty universal.
Find the appeal deadline
You should receive a paper copy of your current assessment every year. Once you receive the updated assessment in the mail and decide you would like to appeal, you need to check for when your appeal deadline is. If it isn’t on the document that was mailed to you, check the local municipality’s assessment page.
Get a copy of your current assessment
To successfully fight your property tax assessment you need to know how your current home was valued. What does the actual assessment say about your home? You can either go online to the local assessment office’s website to pull your report; otherwise you will need to go in person to request a copy.
Check assessment for accuracy
Once you have the assessment in front of you, it is time to comb over it for inaccuracies. Is your home accurately represented in terms of square footage, age, and extra amenities? Or are you listed as having 3.5 baths rather than 2.5? The inaccuracies can drive up the assessed value of your home and result in more taxed owed than is necessary.
Compare your home
Also be sure to compare your home to those around it. There are two critical comparions to make:
- To other home in your neighborhood: If your specific neighborhood has been decimated by short sales and foreclosures, the average price of the home should drop significantly. If other homeowners with homes similar to yours have received lower assessments, make sure to note that.
- To similar homes around you that have sold recently: Not just in your neighborhood, but within a several mile radius. Look for homes of similar square footage and age.
The larger the sample size of homes that are similar to yours but are valued less on the per square foot scale, the better.
Schedule an appeal meeting
Now that you’ve gathered all of your facts, it is time to request a meeting with your local tax assessment office. This is an informal meeting; you don’t need to bring a lawyer or anything like that. Be prepared to have a nice, informal conversation.
Before you go to your informal appeal meeting, properly document and organize all of your documentation. Take photos of the homes that are similar to yours but that are valued less. Take photos of the inside of your home to document its condition and the number of rooms.
Continue appeal to local board
If your appeal is turned down from your informal meeting, it is time to escalate to the local tax board. The concept is the same: bring your documentation, be prepared to discuss your case; you’re just taking it to a higher level.
Continue appeal to state board
If your appear is turned down from the local board, your last remedy is to appeal to a state tax board.
Accept your fate
If your appeal is turned down at the state tax board, accept your fate of paying higher taxes. You’ve done your due diligence in trying to lower your taxes and have been turned away at each opportunity.
Why You Should Fight for Lower Property Taxes — It Isn’t Just About You
Fighting for lower property taxes doesn’t just benefit you. Obviously you are trying to lower your monthly and annual tax cost, which does help you. But fighting for lower property taxes benefits your neighbors and citizens of your municipality. Taking in more tax revenue than they are due allows local governments to overspend in ways that wouldn’t be possible if they had lower tax revenues. Some argue that local governments can use all the help they can get when it comes to tax revenue. But accurate tax revenue also forces government leaders to make tough decisions on budgeting rather than always relying on increasing tax revenues every year.
So fight not just for your own benefit, but for your fellow citizens’ benefit as well.
Kevin Mulligan is a debt reduction champion with a passion for teaching people how to budget and stay out of debt. He’s building a personal finance freelance writing career and has written for RothIRA.com, Discover Bank, and many others.
I would think that most home owners simply wouldn’t think of challenging their property assessment. They’d most likely just accept the number provided and pay those taxes. As a result I’m sure lots of people are overpaying.
I live in the UK and we have a similar tax called “Council Tax”. It works on a similar principle, namely that your property is valued for tax on the basis of other similar properties in your locality. I’ve recently won an appeal to reduce the tax band and in one go saved myself around £400 per year, which is no small amount. The problem is that people rarely appeal tax valuations because they assume that the government gets it right every time! In my experience they don’t.
I agree with the principal but it all sounds so complicated. And when you live in a town where the building departments make projects to difficult to get passed you just get the feeling you won’t be heard. But definitely worth my consideration!