made in my home this year was to hire somebody to prove that its
value had fallen.
I know this sounds daft, but it resulted in a lower property
tax bill. In our case, our taxes dropped by $1,000 to around
$10,000 for the 2011 tax year. But we didn’t challenge our taxes
ourselves – we will pay a specialized property-tax consultant
$250 – 25 percent of our tax savings – to appeal for us.
If you owe more than your home is worth and you want to stay
in your home – or just can’t sell – taxes are the one fixed cost
you can have some success in reducing. (You can also try to
refinance to a lower mortgage rate, but that can be difficult
or impossible when you haven’t any or enough home equity.)
To begin your home-assessment challenge, you can either hire
a consultant to appeal your assessed valuation locally as my
wife and I did, or do it yourself.
Part of this story is hardly satisfying. We knew our home
value declined by at least $50,000 in the housing bust. Our
estimated market value now is roughly what we paid for it more
than a dozen years ago when we built it. Fortunately, due to a
large down payment, we are not under water, although that equity
value probably will not be coming back soon.
It’s never made more sense to challenge your home assessment
than it does now, although relatively few do. Some 11 million
properties are underwater, meaning due to equity loss, the
mortgages on these homes exceed the value of the properties,
according to CoreLogic. Taxes will not necessarily track the
depleted equity values, so you have to see if your local
assessor has valued your property correctly.
Adding salt to homeowners’ wounds is the ongoing,
disheartening erosion of home prices in most cities: Over the
past year, 15 of the 20 largest markets have experienced
declines year-over-year through February, according to the S&P
Case-Shiller Index. U.S. home prices are now at their lowest
level since 2002.
The disparities between what homes are worth on the open
market now and what they are assessed at for tax purposes can
often be huge. The National Taxpayers Union estimates that from
30 to 60 percent of U.S. properties may be over-assessed, though
only 5 percent of property owners challenge their assessments.
The gap between assessed and market value is even larger in
some areas where assessors haven’t accurately marked down home
values due to the housing bust. That is one reason why there
were more than 25,000 assessment appeals in my county in
Northern Illinois last year, compared to 17,000 the previous
year. You will have to do the research on your own to tell if
you’re properly assessed since each property is assessed
differently depending upon home type and local market
Should you choose to go solo on your assessment challenge,
you will need to find three comparable properties that have
declined in value. Also check the property description with your
assessor to see if it’s correct. If the assessor erroneously
included in your property record a finished basement or more
living space or amenities than you actually have, you can
correct it by contacting the assessor directly. That could
result in an immediate assessment reduction.
Are you a senior citizen or a veteran? There’s another way
you might be able to save on property taxes. Check to see if you
qualify for a special exemption. You also should have a
homestead exemption for living in your home. You also may
receive a break on recent improvements or energy-producing
appliances like solar panels. While this is not part of the
appeals process, it might be another way of saving you money.
Having tried appealing on my own in past years with meager
success, I would recommend you hire a consultant. Assessors are
really in the business of pooling money for taxing bodies; many
of them are not homeowner friendly and assessors may guard the
data and methods they use to value homes zealously. I discovered
this years ago the hard way, and helped set up a nonprofit group
in my area to inform homeowners on how to deal with assessors.
Most private consultants will take a percentage of your tax
savings or a flat fee, or both. They should be experienced
assessment professionals (mine worked in a township assessor’s
office) or a professional appraiser. You can find these
consultants through a search engine. Enter “property tax
consultants” for your county. We found ours through a
Keep in mind that an appraisal for a bank is not the same
thing as a valuation for the assessor. It’s a different animal
and your assessor may not accept a current real-estate
If you cannot reach an agreement with your local government
assessor on a lower home value, then you can appeal at the state
and county levels, although that typically involves more time
and paperwork. Many appeal boards are incredibly backed up and
if you miss their deadlines, you’ll have to wait another year.
Here is another misconception you need to avoid: While you
can lower your home’s assessed value, it does not always
translate into a lower tax bill. The other side of the equation
is what rates local taxing bodies such as schools, fire
districts and counties charge you. They can – and will – raise
their rates to cover their budget shortfalls. So you can have
situations where home values have plummeted, but tax rates go up
to cover revenue shortfalls.
Begin planning your assessment challenge now. You will not
only lower your total ownership expenses, but make your home
more marketable. A lower tax bill than your neighbors adds
considerably to curb appeal when it comes time to sell.
Editing by Linda Stern and Phil Berlowitz)