Whereas the majority of us are undoubtedly conversant with our income taxes (even if it is just in anticipation of a refund), a lot of people do not pay much attention to the tax value of their property. This is unfortunate because according to National Taxpayers Union estimates, overvaluation during the payment property tax affects 60% of all homes . On the other hand, just 2% of all homeowners file appeals challenging their property tax assessments.
So how can you as an individual push for lower taxes? To begin with, understand that you cannot lower your tax rate because it is established by your local authority and they are the only body with the power to raise or lower it. But it is possible to lower the tax assessment on your property. Therefore let us begin with a brief tax primer on property tax so that we learn how we can obtain a fair value for our land and home.
Check real estate websites
Naturally, snooping through the property tax records of your neighbor is not a thrilling prospect. Fortunately, there is a very easy method of gathering information when you want to appeal your property assessment-go online and check a few real estate websites and look at what has been sold in your area recently.
Avoid automatically looking at the listings. If possible, get the actual selling prices of the homes. But it is important to note that the assessment value of your property is not always going to reflect its fair market value. Whereas some assessments are founded on home sales, others can be based on the replacement cost of your home together with the valuation of the land that it stands on. Bear in mind that although your home may be a dump in the middle of expensive mansions, it is going to acquire some value due to the surrounding area.
Find an external appraiser
So you have made your decision-after checking with your neighbors and consulting the assessor, you still think that your property is highly overvalued. In case it is not a simple mistake that can be corrected by visiting the assessor’s office again, this leaves you in an awkward situation. Whereas there are fixed rules and regulations that are used by assessors when establishing the value of property, there is undoubtedly room for opinion. And you are now in a tricky position because you are contesting a professional opinion, not a fact.
As one way of solving the problem, you can respond using another professional opinion. Even though some jurisdictions will not allow you to engage an external appraiser to strengthen your appeal, you should think about it where you are permitted to do so. A different certified professional (belonging to either the American Society of Appraisers or the National Association of Independent Fee Appraisers) will greatly assist you to convince the appropriate parties that your home was overvalued. (Clarke)
Build a rapport with the assessor
Up to this point we have made it seem as if the assessors are sinister figures intent on extracting the most amount of taxes possible from your property. But the reality is that it is in their best interests to assess your property correctly. Look at it this way: making property assessments that are too high is not helpful to anybody. Naturally, it overvalues the market and more importantly, it results in numerous appeals from property owners-which does not help the assessors.
Here is some advice: keep in mind that you can obtain a lot of information regarding assessments from municipal websites or you can consider discussing it in an informal meeting at the assessor’s office. Most likely you will be contacted in case the assessor has any queries concerning your property. Make the most of this interaction and explain in detail any discrepancies that have been observed.
Many assessments are carried out without actually getting into the property, but if the assessor asks for a walk-through, make sure you’re there to elaborate on any defects or improvements. A lot of people let the assessor walk freely and unaccompanied in their houses during the evaluation process. This is not a good idea because some assessors will only note the good aspects of the home, for instance the gleaming new counter tops installed in the kitchen or the newly-laid hardwood floor. On the other hand, they are likely to overlook things such as outdated appliances and a damaged and creaky roof that needs to be repaired or replaced. Pointing out these deficiencies will help you get the fairest valuation possible for your house.
Snoop around your neighbors if you believe your property assessment has errors
Like we have mentioned earlier, it is exceedingly important to know the details of your property record card that is maintained at the assessor’s office. It will save you a great deal of time challenging errors or decisions if you can detect them immediately. But those who work at the assessor’s office can let you in on one secret: many people go there to look at the property card of their neighbors rather than their own. Understanding how your neighbors’ properties are assessed might be very crucial in helping you to understanding your home’s assessment. If you feel that a mistake was made on your assessment, it is advisable to look at the houses in your locality. Is your property assessed in a similar way as your neighbor’s property even though they have a swimming pool and a large garage? There may be a good reason for valuing your home equally or there might be an issue with the assessment.
Verify the deadline for challenging the assessment
Even though you are not looking for a battle, it is always advisable to be ready to contest your property tax. Assessments on your property may not be done every year but it is important to establish when yours is being undertaken. (They may notify you that assessments will be carried out but you can also get the schedule for your neighborhood from the assessor’s office)
It is not a must for you to be at the front porch to receive the assessor. But being aware when an assessment happens will make it much easier to detect errors or file petitions at the earliest. Bear in mind that you are paying property taxes each year and if you fail to catch an error dating back two years prior, you will have paid the taxes already. In addition, remember that the office may notify you in case your assessment changes.
Even though the rules for appeal differ from one state to another, the majority of them require you to forward a written statement to a county board detailing why the assessment is incorrect. You need to back your claim using hard evidence for instance photos, property cards and valuations of other houses. Make sure you mention the flaws in your house, for example termite damage or a leaking roof. These problems can help to save money that is even enough to pay for their repairs.
In case you decide to file a property tax appeal, it is recommended that you engage a property tax professional who has extensive experience in the field. These professionals are skilled at collecting information that is required to get lower taxable values. While you may be tempted to do it on your own, it is a complicated and time-consuming process and a professional will ensure that your chances of success are higher.
Actually, avoid trying too hard to make your home stand out
Because assessors are also normal people, and this means they want to see attractive, well maintained homes. A number of assessments are even carried out on a drive-by basis, and this naturally creates an opportunity for biased reporting. The more attractive your home appears, the more property taxes you may end up paying. This is the disadvantage of your home looking nicer than the partially-painted, unmowed house that belongs to your neighbor.
This gives rise to an important point regarding assessments: your home is being compared to those of your neighbors and others in your locality. If you learn that an assessor is coming over, this may really not be the best time to make every effort to make your home more attractive and noticeable. Save your energies for the property showing.
Be cautious when building additional structures
Whereas it seems like a great idea, you ought to know that adding permanent fixtures to your home will not help you to reduce your property tax bill. While that does not automatically mean that you abandon the moat, it clearly implies that you need to understand what you are dealing with in regard to tax before you begin digging the perimeter. You may also contact some local tax or building offices in order to get an estimate of what you may be paying when you actually build.
Visit your local assessor and have a look at your property card
Even though there is no catch-all formula for establishing the value of your home, this does not imply that your assessment is concealed in a place that is hard to access. It is possible to view your assessment. It is known as your property card, and it contains heaps of useful information. Apart from holding the obvious details, for example the land size, improvements on the original structure, number of bedrooms, bathrooms and so on and the types of outbuildings in your home, the card may also include historical data- like when every assessment was done.
Naturally you will want to ensure that the assessment is accurate. Errors can occur and you do not want to find yourself paying additional taxes due to a bedroom that was included by mistake. Check for mathematical errors (your property tax is usually based on a percentage of the value of your property multiplied by a rate that is determined by the local authority); clerical errors like how your property is categorized (residential or commercial) and wrong descriptions that inflate the value of your house (for instance it mentions a porch that does not exist). Detecting such simple errors can result in a lower assessment. An extra tip: while at the office, you could even request the friendly local assessor to describe how he or she conducts property valuations. This may give you a better perspective of how the process works in your local area or municipality.
Understand property taxes
First of all do not be fooled by the name -property taxes- are not paid on your tax return each year. Instead they will be form a component of your mortgage payment. Each month, a portion of your mortgage is sent to an escrow account. Using this account, your mortgage provider or lender pays your property taxes as soon as they fall due.
This might seem to be a good thing, but it is also unsatisfactory. This is because paying tax through an escrow account means you cannot take advantage of write-offs or make special deductions on your property taxes. The payment amounts cannot be changed and you have no choice but to pay them as they are. Because there is no standard formula used by local authorities when assessing the value of your property, you are dependent on your local government or your assessor. So, what can you do to lower your property assessment? For starters, understand what you have been paying so far.