Last Updated: August 16, 2010
While housing prices in many communities have fallen, many local governments have failed to adjust their property tax valuations, meaning that many taxpayers still have homes with assessments based on the market’s peak in 2005 and 2006. Add that to the continued financial threat from a slow job market and stagnant pay raises, and expensive tax bills can put a considerable crimp in your financial picture.
What can you do? Appeal. A successful effort could potentially save you hundreds, perhaps thousands of dollars if the municipality doesn’t raise the tax rate at the same time — a higher tax rate can actually blunt any savings from an appeal.
But appealing your property tax rates should be done whenever reassessments happen, and not just in bad real estate markets. It may sound like a pain, but it’s actually one of the most important educational exercises you’ll ever do regarding your finances. The appeal process keeps you better informed about what is probably your biggest asset and the other properties in your neighborhood. It’s important for you to do the necessary research every assessment period and appeal whenever you believe you have a case.
The basic appeal process involves looking for discrepancies in your taxation board’s math and documenting comparable properties close to yours that are actually paying less in taxes than you do.
Should you always do it yourself? You certainly have the option to get help. In most communities, consultants, attorneys and real estate agents have formed businesses that will appeal your taxes for you. But many will charge up to 50 percent of the first year’s successful reduction. It is also possible that some appeal boards are more likely to consider appeals from individuals.
In any event, the first stop in the process is at your local assessor’s office or website for the forms you’ll need to appeal. You will also find records where you can get an idea of what valuations are on comparable properties similar to yours. It’s generally recommended that you assemble five or more convincing examples to prepare your case.
- Recalculate your bill: Property taxes are based on a percentage of a property’s value multiplied by a tax rate set by the local government. Yet government isn’t infallible, so check that your property description is accurate and that the bill makes sense. Make sure that basics like the number of rooms, baths and other key features look exactly like what you own.
- Don’t take a bath on a renovation: While renovations tend to bump up the market value of a home and therefore its valuation for tax purposes, there might be some wiggle room on various additions and renovations that are not habitable year-round and therefore not equal to a new full-time space.
- Wear and tear can save money: If you can prove to an appeals board that your roof leaks and you haven’t been able to afford to fix it, that your windows need replacement or if there’s a local nuisance like a major road project nearby, there might be an argument to lower the value of a home.
- Get help if necessary: Again, there are law firms and other entities that can essentially field the process for you. But check the fees and make sure your appeals firm has a solid record. Also, ask to see any materials they accumulate on your filing.
- Don’t let the fact that you’ve never appealed keep you from trying: There may be opportunities to eliminate key inequalities in what you’re paying no matter whether or not you’ve ever appealed before. It may be a daunting task, but these days, the chance to save money is paramount.
- Keep deadlines in mind: Check the calendar. Make sure you file your appeal in advance of any critical deadlines that will allow you to lower your payments faster. Your newspaper’s real estate section should make you aware of any appeal deadlines in the county where you live.
- If you’re doing it yourself: Ask for proper advice in putting together a proper application and rehearse your presentation before you make it. Consult local newspaper reports that discuss the process, and organize your questions if you have to go down to the county building for advice or forms. And be polite if you do — employees for the local assessor’s office tend to be very busy during appeal season.