Deflate Your Property Taxes

Appealing an inflated assessment can yield savings year after year

If you’re among the millions of people who helped push home purchases to record levels over the past couple of years, be on the lookout for one particular piece of mail: the tax-assessment notice from your local government. As a new owner, you stand to inherit assessment mistakes that were never challenged by previous owners. And unless you catch them, you will pay inflated property taxes for years to come.

Owners of newly built homes should also take a hard look at their assessments. You might have been assessed based on a “good faith estimate” by the builder, rather than on a look at the sale of comparable homes.

If your assessment notice sets a value that’s higher than what you recently paid for your home, it’s worth an appeal. But don’t be lulled into inaction if the assessment is significantly lower than your purchase price. Most assessments are for less than full market value, even in communities where the official policy is to levy taxes based on 100% of a property’s value. And don’t ignore the notice if it says, “This is not a bill.” You may not owe money now, but now’s the time to appeal an out-of-whack assessment. You may have as little as 30 days in which to act. When the actual bill comes, it’s too late to appeal.

Checking Your Assessment

Start by digging out your own copy of the land survey that shows the legal identification of your lot and the dimensions of your land. Then take a tape measure and measure the outside dimensions of your house. Make a note if the second story is smaller than the first; assessment records often mistakenly list them as the same.

You should also search the neighborhood for homes that are comparable to your own. The best match is a house that’s the same age, size and style and in the same condition as yours.

Once you’ve done your homework, go to the tax assessor’s office and ask to see your property record card-the worksheet the assessor uses to arrive at a taxable value. Are all the facts right? Does it list amenities you don’t have, such as a garage that was torn down years ago? While you’re at it, check the math.

Then review the cards for the comparable houses, including the assessed value of each one. Even if your home is assessed for less than it is really worth, you may be over-assessed if the value is set above the value of similar homes.

If your research shows that your assessment is incorrect, a cordial meeting with the assessor may be all it takes to get a correction. Or you might have to submit some minimal paperwork for a formal appeal. Be sure to suggest a specific value that you think would be a fair assessment.

Five Keys To Fighting A Property Tax Assessment

Preparing an appeal for a reduction in your property tax can be an intense and time-consuming effort. If you’re unhappy with your assessment, first review the five rules below. If you believe that you need to appeal your assessment, you should consult knowledgeable local real estate professionals about trends in property values in your community. Also, ask neighbors who have gotten their taxes reduced for advice on how to prepare your case.

  1. Act quickly. Even if the language on your property tax notice assures you that it’s not a bill, don’t toss it in a drawer. You may have a limited amount of time, maybe as little as 30 days, to contest your assessment for that year. Drop by the assessor’s office to find out the cutoff date for appeals and, while you’re there, make certain that you ask to see your property card. If you notice a blatant error-you’re assessed four bedrooms, not the three you actually have-you’ll get a reduction with little hassle.
  2. Find good comparables. To argue that your property is overvalued, you need to show that properties very similar to yours recently sold for less on the open market or, in some states that properties like yours are currently assessed at less. These “comparables” will make or break your case, so they’ve got to be right. Check local tax regulations (your library will help you locate them) to find out details such as allowable time frames for sales. Then comb through property records, which are public information, at the tax assessor’s or county tax office to find the best allowable comparables.
  3. Keep your emotions in check. It doesn’t matter whether the local school board wastes money or whether you’ve tried to sell your house for the assessed price and failed. Outbursts muddle your argument and may irritate people you need to persuade.
  4. Don’t give up. In some cases, you can take your protest all the way to the state’s Supreme Court, though your energy and resources might flag sooner. It can be lots of work-but finding justice often is.
  5. Consider hiring a pro. Using a professional appraiser or real estate lawyer specializing in appeals can save you aggravation in two ways. Most work on contingency, meaning they are adding a percentage—typically 20% to 50%—of your tax savings over three years or so, depending on the amount at stake. And since a pro won’t take an obviously hopeless case, consulting one is a useful way to find out if you’ve got a realistic shot. To find such an expert, contact your state bar or professional appraisers’ association.