Many homeowners are not aware that it is possible to reduce the property taxes that they pay. Each year, they nonchalantly look or wince at the escrow notice on their mortgage and pay up without giving it a second thought. Just 2% percent of all homeowners appeal their property tax assessments (the first step when it comes to reducing taxes) in spite of the huge potential in money savings.
To make things even worse, the National Taxpayers Union reports that assessors overvalue 60% of all properties. Generally, it is surprisingly easy to get some relief on property taxes. The local assessor in your area can help you out on this. Below are five measures you can take:
Examine the description of your property
Your assessor may have stated that your property has four bedrooms instead of three, which is the correct number. This mistake can be rectified by submitting building drawings or having them visit your home. Naturally, a reduced amount of living space translates to a decrease in the tax bill. The description of your property must be spot-on in regard to rooms, amenities and total square footage.
Are you eligible for any exemptions?
If you are living in your home and have not rented it out, you automatically get a “homestead” exemption.
Veterans, seniors and the disabled can also get exemptions. To know whether you qualify, contact your assessor or check their website.
Have you been over-assessed?
The best indicator that you need to appeal is if the assessor’s market estimate of your property exceeds what you believe you can get if you sold it. This estimate may be unclear, but you should always appeal if you feel that you are being over-assessed.
To learn how much your property might be worth, talk to your local real estate agent or visit zillow .com. But remember that market values are usually estimated. The actual value of your home is the amount of money a buyer ready to pay for it at the close of the selling transaction.
The assessors will give you a 30-day window to appeal the assessment notice. You will be forced to wait until the following year if you do not begin the appeal process during this period.
In addition, you will be required to know the equalization factor (a number used when multiplying the assessed value of your property) of your county. Among other things, the equalization factor is an indicator of the prevailing market conditions.
Sadly, it is not possible to contest the final tax bill straight away even though you may definitely complain (failing to pay your tax bill can make you lose your house). To compute your annual property tax bill, the total equalized assessed value of your property is multiplied by the local tax rate.
Generally, you can use three properties of similar square footage and characteristics with a lower assessment to support your assessment appeal case. While you need to have like-for-like comparisons, you will probably be required to follow the tax appeal process in your county.
Your home has unique problems
Let us assume there was a natural catastrophe in your locality and a tree fell on your home or there are additional damages that you have not yet repaired. Or there was flooding in your area. You may note down these problems and make a request for a lower assessment.
You conducted a sale recently and you have an up-to-date appraisal
In case a qualified appraiser says your home is overvalued, that is normally sufficiently strong evidence. Furthermore, you can get a new appraisal even though it could cost you a few hundred dollars. But it could be worthwhile if it supports your case for a lower tax assessment.
Remember, you are not appealing your property tax bill directly. This is because there is not much you can do by the time you receive it. Tax rates are fixed by local organizations such as school districts, villages, and various other agencies. There is not a lot that you can do unless they reduce their rates or levies.
At any rate, it is always useful to appeal. It might not be possible to reduce your tax bill but it is advisable to try it. The assessment procedure is generally unclear and it is not always standardized. You should challenge it if it is unjust.