Start by making sure you’re taking advantage of all the property tax breaks available to you. Many jurisdictions will exclude a portion of a home’s value from property taxes if you’re a senior or a veteran, or if you’re disabled. In Florida, all homeowners are eligible for a homestead exemption of up to $50,000; those 65 and older who meet certain income limits can claim up to an additional $50,000. Other jurisdictions reduce your tax bill by a certain percentage if you meet specific criteria. (Discover property-tax rates and breaks in every state via Kiplinger.com’s state-by-state guide to taxes on income, property and everything you buy.)
These tax breaks are valuable, but they’re often overlooked. For example, when Chicago increased property taxes by an average of 13% last year, it included a rebate program for low- and middle-income homeowners. The rebates were worth up to $200, but only 11% of eligible homeowners claimed them.
Rebates and other property tax breaks aren’t automatic; you usually have to apply for them and show proof of eligibility. Go to your tax assessor’s website for details.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Fighting city hall. You can score an even bigger tax cut by challenging the assessed value of your home, which is used to calculate your tax bill. The National Taxpayers Union, an advocacy group, estimates that 30% to 60% of property in the U.S. is assessed for more than it’s worth.
See how often your jurisdiction assesses property. If it’s not every year, there’s a greater chance your home’s value has changed since the last assessment. Check how market value is determined. An appraiser might compare your property with similar, recently sold properties to determine its market value, then multiply that by a set fraction, known as the assessment ratio. So if a property’s market value is determined to be $100,000 and the assessment ratio is 80%, the assessed value for property tax purposes would be $80,000. Property tax bills are typically calculated by multiplying the home’s assessed value by the local tax rate. You can find this information on the tax assessor’s website.
Next, review the assessor’s data on your home. You’ll find this on your property’s record card, which should be on file at your assessor’s office and may be available online. Look for errors, such as an incorrect number of bathrooms or inflated lot size. If you can’t find a glaring mistake but believe your home is still being over-assessed, check out the property cards of similar homes in your neighborhood to see how their assessments compare with yours. If the assessments on those properties are lower than yours, you can make the case that your property’s assessment is too high. Recent sales of homes in your neighborhood could also help you demonstrate that your property is overvalued.
Armed with this information, request an informal meeting with your assessor. He or she may agree to adjust your assessment on the spot, says Aaron Terrazas, senior economist at Zillow, an online real estate marketplace. If that doesn’t work, request a formal review. Procedures vary, but a typical review takes one to three months, and you’ll usually receive the results in writing. You can find the procedures for your jurisdiction on the tax assessor’s website. Pay attention to deadlines. Most jurisdictions give you 90 days to challenge a new assessment, but some give you only 30 days to appeal.
If that doesn’t work, most jurisdictions allow you to appeal to an independent board. The burden of proof is usually on the property owner, so come prepared. Zillow offers a tool you can use to check recent sales of properties in your neighborhood. Alternatively, ask a real estate agent to point out three to five comparable homes that have sold in the past 60 to 90 days, or get a professional appraisal (expect to spend several hundred dollars for one).