He says a year ago the value of his one-story home in the couple's age-restricted community decreased about $30,000 while the property taxes increased. So he and some of his neighbors worked together to individually appeal the property tax increases on their homes. One of his neighbors pulled the comps (comparable home prices) for everyone and someone sat down to help Joel fill out his paperwork. "I prepared the document and signed it, but truthfully, I didn't know what I was doing. I didn't understand the math." Still, those efforts paid off. About two months later -- and three equal payments in on the old bill -- he received a letter stating that his taxes were being decreased and that his remaining balance was only $10 -- a savings of about $850. The jubilation didn't last long, however, as the following year his home's value was reassessed and his property taxes went back up.
Feel like you're paying more than your fair share of property taxes? You're not alone. Many believe their homes are over-assessed.
And guess what? A high percentage of homes really are over-assessed -- anywhere from 30 percent to 60 percent, including commercial property, according to the National Taxpayers Union. Yet few homeowners do anything about it. Nationally, only 2 to 3 percent of homeowners ever attempt an appeal.
That's too bad, because the process is actually rather simple.
The odds are good, too: About 20 to 40 percent of appeals are successful, says NTU spokesperson Pete Sepp. "I encourage people to view this process as if you were contesting an expensive parking ticket," says Sepp. "It's not a big jury trial in a court of law so much as it's a structured forum for settling grievances."
So what should you do if you want to appeal your property tax assessment?
- Get your property card. First, get the information in the assessor's file about your home from the property card, which will include the method and data used to determine its value, its lot size, square footage, any known upgrades, and of course the number of bedrooms and baths. Do not take no for an answer. Some assessors may try to tell you that you can't see this information, but it is a public record and you have a legal right to see it.
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- Check the accuracy of information. If you turned a closet into another bathroom, or converted an attic into a fourth bedroom, or knocked down a wall to change two small bedrooms into one large master suite, these improvements should be reflected on the property card. If the card is inaccurate, a new property assessment could bring it's value up rather than down. The same is true if the assessor thought you had an aluminum siding and brick exterior like your neighbors, when in reality you have vinyl and stucco, and that bathroom addition was done by the previous owners 10 years ago.
- Understand the math. Property tax assessors' offices vary in how they determine a home's value. Some base it on recent sales data from similar homes, others may estimate the cost to rebuild or use a combination of methods. Some incorporate tax breaks for homesteaders or farmers. The assessor may use the full determined value, or a percentage, such as 90 percent of the actual assessed value. (This is why sometimes assessed values of your home can be less than what they sell for -- if this happened in your case, don't worry, you can still qualify for a reduction.)
- Get comps. You can get sales data from Zillow.com and ListingBook, or a Realtor. Just be careful not to use estimates based on current listings. Instead use actual "sold prices" for the time period you're evaluating. The assessor's office also might have this data available. You will need a minimum of 3 to 5 homes, but there should be no need for more than 10 homes in your comparison.
- Use the correct assessment date. Make sure your property tax assessment is for the same date the assessor used. If the county assessment was for, say, January but you used data from April, your estimate may be considered inaccurate and your case could be dismissed.
- Consider using a professional report. Now, granted, the cost of any savings you make would be offset by what you pay to a professional, but depending upon how much you're looking to save, this could be worth it. Appraisers can charge anywhere from $200 to $500, and property tax consultants typically work on a contingency for 25 percent of the savings. If you recently refinanced your mortgage or had a home equity loan, you might already have access to a professional appraisal.
- Prepare your document. After reviewing the data you gathered, determine if you can prove that your property was assessed at a higher level than the legal standard or at a higher value than the level of nearby comparables. If so, prepare your argument on paper. When you can do so honestly, agree with much of what the assessor did and stress that you do not question the assessor's sincerity. Just point out the differences in valuations you found. Avoid calling for the assessor's head on a stake, or pointing out that your taxes pay the assessor's salary, or just calling the assessor incompetent.
- File the appeal on time. Make sure you appeal during the right time-frame. Typically you will have 60 days from the time your annual tax assessment was mailed to you, which is usually during the first three or four months of the year. Hand deliver the packet so you can get a stamped receipt, or use certified mail. Both will give you an office date of delivery. You don't want to lose your case because you didn't file on time.
- Wait for a response. Property tax appeals can take place through hearings in which the homeowner personally makes a case before a local board of officials. Your officials will notify you by mail of a hearing date. However, some governments handle the entire appeal by mail, and you simply receive a decision on your appeal in the mail a few weeks later.
- Attend hearings. If your area handles such appeals with public hearings, attend a handful of hearings from other property owners before your date arrives. This gives you a chance to see if the board members raise any issues that you may not otherwise have been prepared to answer. Should your first appeal fail, or should another appeal become necessary, most states allow three levels of appeal in property tax cases. Typically, a state agency is the second level, with the courts reserved for the third level of appeal. Very few homeowners find it necessary to go to court for relief.
If you need more information, the NTU has a consumer brochure, "How to Fight Property Taxes," which is available for download from its site for a small fee. It covers everything, including what to say at a hearing.
Sheree R. Curry is an award-winning business journalist who resides in a Minneapolis suburb.
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