In this era of continuously declining property prices, it may well be worthwhile to cross-check and challenge your property tax bill and save, from a few hundred dollars to thousands, depending on the value of the property. The National Taxpayer’s Union estimates that 60% of properties are assessed at a higher value than what the market dictates and in a poll recently conducted with Klipinger’s readers, 52% reported that their property taxes had gone up during the past year, but only 16% were planning an appeal.
Is it worth handing governments a gift, especially in the course of hard economic conditions? All homeowners would most likely answer no to this question; however, most will not take action, probably due to lack of knowledge, or simply inertia.
Local governments are also facing budget shortfalls of their own, and some states already have taken steps to bring in additional revenues through property taxes, notably California, Ohio, and Michigan. To take a case in point, California has passed a law proclaiming that starting with the 2012 tax year, with the first installment due on April 1, 2013, only portions of the property taxes directly related to the assessment value of the property will be deductible, and taxes on such items as parcel or sewer services will no longer be tax deductible. Gone are the days when homeowners could just automatically deduct the full property tax bill.
Rules and various deadlines vary between jurisdictions; however, the underlying process is similar in most cases.
Although county assessors routinely reevaluate property values periodically and make the necessary adjustments, remember that the lag time could be several years between reevaluations, and the current tax bills will remain the same until the next reevaluation period, even while property values may decline on a monthly basis.
Steps to Contest Property Tax Bill and Save
- The new lower assessed value may still be substantially above market value, therefore do not take the county assessor’s value as gospel.
- Research the procedures used to arrive at the assessed value: county appraisers typically use the average most recent sale price of of comparable properties, then multiply that by what is called the assessment ratio. For example, if the average price is $100,000 and the ratio is 0.90, then the assessed value becomes $90,000. Appraisers also like to use newer properties for comparison purposes, therefore, if your property is older, it may not be worth as much.
- Check for errors: if the properties used for comparison have a higher square footage, or have more rooms than you have, then you may have a good case. A less desirable view can also be grounds for a reduction.
- Homestead exemptions are the easiest way, but too often overlooked.
- Tax exemptions and circuit breaker credits are available to senior citizens in most states.
- When making the case with your own comparables, be very accurate, with solid and verifiable information; guesstimates will never work. Zillow.com and Trulia.com can help in this area.
Companies have sprung up lately to assist in the appeal of property tax assessments, just make sure you will actually save money after deducting their fees. Some will conduct a preliminary assessment to show you the savings, but an unreasonable upfront fee is absolutely out of the question. Exercise extreme caution if they charge a percentage of the property’s value.
Whether you conduct the appeal yourself, or hire a company to handle the process on your behalf, it is most likely beneficial that you contest your property tax bill and save. And keep watching market conditions in the subsequent years