How to appeal your property tax assessment, save money
Forget about keeping up with the Joneses. This time of year you want your house to be as crummy as possible. Why? Because it's property tax assessment time, which means it's also assessment appeal time. And if you can successfully argue that your house isn't worth as much as the government says it is, you can save a bundle of money on your property taxes.
Josh and Alicia Green embraced the concept of trashing their own house, writing a description for their appeal that was the polar opposite of a real estate agent's gushing ad. "We reminded them we lived on a busy road, Western Avenue," Josh Green said. "We also told the city about costly repairs we needed, like a new roof." In addition, the Greens noticed that the District of Columbia listed their house as having three bedrooms. "But we alerted them that the previous owner had knocked out a wall and made it two bedrooms, thus lowering the value more," Green said.
According to the National Taxpayers Union, less than 5 percent of homeowners do what the Greens did, even though the union estimates that between 30 and 60 percent of properties in the United States are over-assessed. "The vast majority of assessors are not malicious or careless; they are simply making judgment calls about how to utilize limited resources in tackling a big job," said Pete Sepp, the union's president. "Homeowners shouldn't take it personally, but they shouldn't assume the government is right, either." Sepp says that when well-prepared homeowners take the time to appeal, most win at least a partial victory. Here's how to improve your chances of being one of the winners:
• Meet the deadline. Once you receive your assessment, you typically have just 30 to 120 days to file your appeal. Check the rules for your jurisdiction and make sure your paperwork is postmarked by the deadline.
• Understand "assessment ratios." Some jurisdictions tax your house based on 100 percent of its value, but others assign a lower "assessment ratio," such as 60 percent. This means a house with a market value of $100,000 would have an assessed value of $60,000. If you see a number that's lower than your home's true value, check the assessment ratio before assuming you don't have a case. You can find that ratio on your actual tax assessment notice or on the assessor's office website.
• Look for errors on your "property work sheet." Contact your tax assessor's office and request the internal notes and data the assessor used when setting a value for your property. Different jurisdictions call this paperwork different things, including "property work sheet" and "property card." What you're requesting are the internal notes and data the assessor used when setting a value for your property. Study these documents, checking for lot size, house age and dimensions, number of bedrooms and baths, most recent purchase price, and anything else that could affect your home's value. If you find mistakes that make your property seem more valuable than it is, that is strong ammunition. This is the tactic the Greens used when they pointed out that their house had two bedrooms, not three.
• See if the "comparables" are really comparable. The government's internal notes will also include "comparable" properties the assessor used to help determine the value of your house. Look for reasons the properties the assessor chose are not appropriate. Are they bigger? Newer? Newly remodeled? Do they have watertight roofs, while your house needs a new one, as the Greens' did? Next, identify three to six alternative comparables that are more favorable to you. You can find them free using such websites as Redfin, Trulia and Zillow. Or you can consult a real estate agent or appraiser.
• Escalate as needed. Some property tax disputes can be settled through informal discussions with the assessor's office. For example, Fairfax County, Virginia, encourages homeowners to call. More commonly, you will be asked to fill out forms and the entire process will be done on paper. If your initial appeal fails, most jurisdictions offer an in-person hearing as the next step. Tip: Attend somebody else's hearing first to get a feel for the process.
• Hire help if you must. If you don't have time to follow the steps above, you can hire help. Some real estate lawyers take property tax appeals on a contingency basis, which means you don't pay unless you win. If you prevail, a typical fee is one-third to one-half of the first year's savings.
The Greens ended up appealing their property tax assessment several years in a row and won every single time. "Fighting our tax assessment was less time-consuming than filling out my kids' summer camp forms," Alicia Green said. "And for the time invested, you get money back instead of forking it over." The Greens estimate that they spent about five hours and saved at least $5,000 in property taxes over the seven years they lived in that house. "We made a strong, truthful argument, and it was effective," Green said.
Sepp says the Greens got it right by sticking to nuts-and-bolts information about their property, rather than complaining that their assessment was unfair. "A homeowner who marshals proper evidence, sticks to facts rather than make political statements and follows procedure is more likely to meet with success because they've made their own luck," Sepp said. "You wouldn't go into traffic court to challenge a parking ticket by arguing the mayor is corrupt. Rather, you'd provide evidence you were parked there properly during nonpaying hours."
Another benefit of appealing your assessment: When you successfully lower your property tax rate, it resets from that lower rate for years to come. "By the way, it did not affect the value of our house when we sold," Alicia Green said. "I imagine people would wonder that." It's a common misconception, but think of it this way: Lower property taxes are a benefit for potential buyers as well.
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Leamy is a 13-time Emmy winner and 25-year consumer advocate for programs such as "Good Morning America" and "The Dr. Oz Show." Connect with her at leamy.com and @ElisabethLeamy.