The long answer is complicated, but the short one is simple: Property owners have not systematically appealed their tax bills. Indeed, few are aware that an appeal is even an option.
Until now, that is. The trend is finally shifting, The Wall Street Journal reported last week, as homeowners across the nation mobilize to protest tax bills they believe do not reflect the current value of their homes.
A survey done by the nonprofit group National League of Cities reported that 25 percent of cities in the U.S. raised their property tax rates in the 2009 fiscal year in response to plummeting tax revenues. Meanwhile, property values have taken a 22.3 percent dip from 2006 to 2009, according to the National Board of Realtors.
Unless you has an extremely fastidious tax assessor, the odds are good that your home's tax bill has not been adjusted downward to reflect its value in a declining market. That leaves the burden of reassessment squarely on the homeowner.
Procedures to appeal local property tax raises and can be hard to find out about and are often tedious, but certainly not insurmountable. The first step is to visit your local jurisdiction and learn more about the procedures in your area. It is important to understand how property values are assessed, how that assessed value is taxed, how often assessments occur, and what is the exact process to appeal the assessment. During the housing boom, the National Taxpayers Union estimated that as many as 60 percent of all homes are over-assessed. One can only imagine how high that figure might be in today's market.
Key signs that a property has been over-assessed include errors in your property's description on the tax bill; comparable homes in your neighborhood selling for less than your appraised value; and the presence of recently emerging depreciation factors in your area, such as re-zoning, an increase in traffic, new industry or increasing drainage issues.
Also, many states have property-tax credit programs for low-income residents, as for senior citizens and the disabled. California, Oregon, Texas and Minnesota sponsor tax-deferral programs, which place an "increasing lien" on the properties of residents who can't afford to pay. When the property is sold, counties collect the accrued tax plus interest from the buyer.
The for-profit American Homeowners Association provides a kit to guide you through the property tax appeal process for $29.95; some bare-bones guides are available from local tax authorities. However, experts warn against paying high fees on to online services promising to take care of the details for you.
Whatever route you choose, if property values have dropped significantly in your area, now is an ideal time to question tax bills that have headed in the other direction. Deadlines to appeal vary by region, but generally fall in the spring.