Filed under: Real Estate, Taxes, Property Tax, Tax Laws
By Stacy Johnson
Depending on where you live, property taxes can range from a slight inconvenience to a crushing expense.
Here in South Florida, for example, the annual tax bill for my 2,200-square-foot waterfront home is close to $9,000 annually. Outside Atlanta, where my parents lived, they were paying less than $1,000 a year. But wherever you live, if you feel your taxes are unfair, you have options.
And that brings us to today's reader question: "Do you have an article on how to fight property tax hikes? I feel like I'm being held hostage. I'm fighting my property assessment, but feel that I am hitting a brick wall despite all the evidence I've been providing to the various government entities." -- Keya
I've successfully appealed my property taxes twice over the years, once in Arizona and once in Ohio. According to the National Taxpayers Union, 30 percent to 60 percent of taxable property in the United States is overvalued for property tax purposes, yet fewer than 5 percent of homeowners challenge their assessments. In my experience, appealing tax bills isn't all that difficult. And because it can result in saving hundreds, even thousands, every year, if you think you have a case, try it.
Learn the Rules of the Game
The way property taxes are computed -- and how they are appealed -- differs from state to state. But property taxes all start from the same place, the value of your property. So the first step is to check the value your county is placing on your property. Historically, doing this meant waiting to receive an annual appraisal in the mail. These days you can often find this information online in seconds.
However you find it, if it seems too high, take the next step: Look online or contact your local property assessor or appraiser's office and find out exactly how they arrive at values. Then determine how the appeals process works.
When property values were plunging here in South Florida, it seemed that my appraised value was way too high. Then I learned the assessor's office was using prior year values to determine current year assessed values. For example, my 2012 tax bill, due in November 2012, was based on the value of my home between Jan. 2, 2011, and Jan. 1, 2012. So here they're using values beginning nearly two years before bills are sent out.
The point is, before you start challenging values, be sure you understand where they came from. It's also important to understand how properties are appraised. Where I live, the appraiser's office uses sales to determine values, placing more weight on more recent sales. To find out how properties are appraised where you live, call the applicable county office or do a search online: "How property values are determined in (your city, county, state)."
Bureaucrats Can Be Friendly
After understanding how appraisals are conducted, if you think you have a case, do another search: "How to appeal property taxes in (your city, county, state)." You'll probably find simple instructions. As an example, here's what I found with those search terms for my county: "If you believe the market value as shown in the box 'Your Property Value This Year' is higher than the market value of your property as of this past January 1, we encourage you to contact us. One of our Deputy Property Appraisers will happily meet with you and discuss your market value and how it was calculated. After this conference, if you still feel your market value is too high, you can file a simple petition with the [Value Adjustment Board]. The VAB appeal application forms are available on our website and are also available online on the VAB's website (and you can also check the status of your filed petition). The VAB has a statutory $15 filing fee, which must accompany the application. The VAB doesn't accept petitions on valuation cases after the mid-September filing deadline.'
Note the above description comes off as fairly friendly. While it may seem you'll be entering a hostile environment by challenging your local taxing authority, in the instances that I've challenged my property taxes, the people at the respective county offices were both friendly and forthcoming. While I obviously can't guarantee you'll have the same experience, you might be pleasantly surprised.
Winning the Game
You won't win a property tax appeal based on a belief your taxes are unreasonable or because you have a gut feeling your appraised value is too high. If you can't make your case with facts and figures, you'll lose.
When it comes to challenging value, the first thing to do is make sure there are no mistakes. Does the county have your correct lot measurements? How about the square footage and age of your house? Verify everything.
Next, see if there are arguable differences between the nearby comps used by the county and your property. Ask the county for the comparables they used. See how those homes differ from yours.
The goal is to show how the comparables used by the county weren't really all that comparable. Was the home that sold down the street a few months ago really like yours? Or was it newer, nicer or otherwise an unfair comparison? Arm yourself with recent sales and comparables that support your home's lower value, along with evidence the homes used by the county weren't comparable after all.
You can find current comparables yourself online (do a search for "Recent sales (your ZIP code)," or ask a real estate agent for help.
The Importance of the Appraisal
Your ultimate weapon in challenging property taxes, however, is an appraisal. If the county says your home is worth $200,000, but a licensed, independent appraiser says it's worth only $150,000, it's going to be a hard argument for the county to win. An appraisal will set you back a couple hundred bucks, but depending on your county's rules, it may be necessary. A simple call to the appraisal office should tell you.
An example: My home in Cincinnati sat on one lot, but my side yard was a different, comparably sized vacant lot. The county placed a high value on my vacant lot, evidently considering it buildable. At my hearing, I used plat maps and pictures to show that my home completely blocked my side yard from the street. Since there was no possible ingress or egress, meaning the vacant lot couldn't be built on, it was worth far less than a buildable lot.
My argument worked, and the appraised value of my side yard, along with my taxes, went down. In that case, I didn't need an appraisal. I was able to simply state my case. Here in Florida, however, I was told I'd need an appraisal to win a similar case. That's why it's important to talk to the folks at the responsible agency and find out how decisions are made.
The Bottom Line
Keya says, "I'm fighting my property assessment but feel that I am hitting a brick wall despite all the evidence I've been providing to the various government entities." While I don't know the rules of engagement where Keya lives, to win this battle, he or she may have to spring for an appraisal. I've won appeals without one, but that's the most reliable weapon.
Another option is to hire help in the form of a local real estate attorney or one of many services that will fight for you. But my advice, especially if the amounts aren't major, is to go it alone. Best case, you'll put some money in your pocket. Worst case, you'll get an interesting civics lesson.
Got a Question You'd Like Answered?
You can ask a question simply by hitting "reply" to our email newsletter. If you're not subscribed, fix that right now by clicking here. The questions I'm likeliest to answer are those that will interest other readers. In other words, don't ask for super-specific advice that applies only to you. And if I don't get to your question, promise not to hate me. I do my best, but I get dozens of questions daily and only answer one weekly.
Stacy Johnson founded Money Talks News in 1991. He has earned a CPA (currently inactive) and has also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. Got some time to kill? You can learn more about him here.