Cut Your Property Tax Bill

By John F. Wasik

This may sound crazy, but you need to lower your home’s value.

I’m not suggesting you damage it in any way. Just challenge what your local assessor is saying it’s worth so that you might be able to lower your property taxes. I try and do this every year with some success.

With property values still down across the board in most places, now is the best time to appeal your home’s value. We’re entering the season in which assessors release valuations of how much your home is worth for tax purposes. Their valuation is one part of the basis for your property tax bill. The valuation times local tax rates (for schools, fire protection, etc.) equals your real-estate bill after exemptions and other local factors are applied.

Most counties give you a limited window in which to appeal your valuation – typically about a month. After that, you’ll have to wait until next year to do an appeal. Don’t wait. You’ll need to do a lot of homework to win a successful appeal. Because only 30% of all homeowners appeal their assessment, you have a good chance of getting a hearing on how to lower your valuation.

You will be appealing last’s year valuation – not this year’s – since property taxes apply only to the previous year. So what’s happening in your market now isn’t relevant to your assessor. Also don’t confuse an assessed valuation with a market value. They are not the same thing. A market value goes through a real estate appraisal process for purposes of selling a home. Your local assessor makes a much more basic calculation based on your neighborhood, type of home and improvements.

Here’s what you need to know:

• Is Your Property Record Correct? It’s public information as to how many bedrooms and bathrooms you and your neighbors have. Check your assessment record. If they have you incorrectly listed for an extra bath or finished basement, go right to the assessor to fix that. It could easily lower your tax bill.

• Are comparable homes valued less than yours? Assessors are concerned about consistent valuations. Compare your home with similar houses of equal footage, improvements, lot size and other characteristics. If you file an appeal, you will need “comparable” home examples. Present recent professional appraisals.

• Is your home new? You will need a sales contract to show what you paid. If it declined in value, then make a case with recent sales figures. Any factor that may have caused your home to drop in price should be presented.

Most simple errors can be corrected with your assessor. If that doesn’t work, you can appeal on the county and state levels with real estate boards of appeals.

Keep in mind that most appeals fail because homeowners don’t present the facts logically and succinctly. Most county appeals hearings only give you a few minutes to state your case. If you’re emotional and try to argue based on your gut feeling, you will lose.

You can hire lawyers and appraisers to help in your appeal. If you take them on, make sure you pay them based on contingency or a flat fee. Lawyers will take one-third of your tax savings. Avoid those who bill on an hourly basis.

If you win your appeal, you could save from a few hundred to a thousand dollars on your tax bill.

To most homeowners, lower tax bills are much more alluring than granite counter tops. Your homework is worth the effort, won’t impact your market value and will make your home more appealing when you go to sell.

John F. Wasik is the author of The Cul-de-Sac Syndrome.

Photo: Home for sale in San Francisco. REUTERS/ROBERT GALBRAITH

From reuters.com