Lower Your Property-Tax Bill
If your house has lost value, challenge the assessment.
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, April 2009
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If you anticipate a silver lining in the black cloud of declining home prices -- in the form of lower property-tax bills -- you may be disappointed. The National Taxpayers Union figures that as much as 60% of taxable property in the U.S. is overassessed, largely because assessment cycles haven't caught up with the decline in home values.
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In California, for example, a home's assessed value is based on its purchase price, plus increases of up to 2% annually. The house isn't revalued until it's sold again. To capture the price plunge of the past few years, homeowners must file an appeal and prove that their home's assessed value exceeds its market value. In San Diego County, the assessor's office processed 80,000 appeals in 2008; the average reduction in assessed value so far is $110,000, equivalent to a tax cut of $1,200.
Many jurisdictions calculate a home's assessed value as a fraction of its market value, so do the math to make sure your home is priced fairly. Also verify that you have received any breaks you're entitled to, such as a homestead exemption or a reduction for seniors or veterans.
How to appeal. Go to the assessor's Web site or office to double-check the "property card" and any working papers for your home. Are the figures for square footage and number of bedrooms and bathrooms correct? Has the assessor accounted for any features that could detract from your home's value, such as an irregularly sized lot or a carport instead of a garage? Pull the property cards for five or ten neighboring homes that are similar in terms of age, style and features. If the assessments on similar properties are a lot lower -- 10% or more -- you have a good case based on uniformity.
Otherwise, if you believe your home's assessed value exceeds its market value, you'll have to provide sales-price data for several comparable homes. You can get that information from a real estate agent, or check the local public library or your county assessor's or county clerk's office. Ask the assessor whether a recent appraisal for, say, a refinancing is acceptable proof of your home's market value.
Two chances. Read your assessment letter for details on how to appeal. You'll probably have two windows of opportunity: During the first, you may request a reduction in the assessed value of your home for the forthcoming tax bill. During the second, you may appeal for a retroactive reduction and refund.
Until your appeal is resolved, pay your tax bill in full to avoid incurring penalties and a lien against your home. As a last resort, you could go to court, but that's an expensive process usually best suited for commercial property owners with more at stake.
You may see advertisements for companies that will help you appeal your assessment, often in exchange for about half of any savings on your tax bill. But with the right preparation, you can probably do just as well yourself using a guide such as How to Fight Property Taxes ($6.95), from the National Taxpayers Union. The NTU's Web site also has links to state and local taxpayer associations that may offer further insight into the appeals process.
Reader Comments (5)
Posted by: Adam Berkson at 03/11/2009 09:33:00 AM
One way to help you file an appeal is to check out www.easytaxfix.com. We are currently operating in NJ and certain counties in CA...We launched an online platform (www.easytaxfix.com) that provides that initial property tax analysis for free. Check it out!
Posted by: Bonnie at 03/27/2009 10:58:46 AM
I'm in Florida where the homestead exemption just went from $25,000 to $50,000. For seniors who have AGI less than $25,870, the exemption is an extra $50,000 making it $100,000. Since I am a senior taking advantage of the $100,000 homestead exemption, I will not fight my property tax valuation which has recently gone down. What I do wonder about is the insurance company stating that the cost to rebuild my 1800 square foot home is $125 a square foot or $225,000. The property assessor shows the value of my home as $117,000, but the insurance company insists that I must carry insurance to replace my home for $225,000. Please help on this issue.
Posted by: Greg Ins Man at 03/30/2009 12:04:50 PM
Reply to Bonnie. As an insurance agency owner I feel that Bonnie may have been forced with a bit too much insurance unless that 1800 sq ft home has a screened pool. Insurnace companies requires the insurance be equal to 100% of the replacement cost estimation for the home. In that replacement cost it accounts for the haul away of the debris if the h0ome was lost due to fire and also the overhead needed to utilize a general contractor for the rebuilding. Call you agent and ask for a replacement cost estimation or call Certified Insurance in Longwood, FL and we will assist. You can then send a signed statement along with the repl. cost estimation and ask for your coverage to be lowered in conjunction to match that revised cost. Best of luck!
Posted by: Gary at 05/08/2009 12:09:34 AM
I live in San Diego County where I purchased a home in 2007. Following the Tax Assessor rules , in August 2008 I applied for a reduction in assesed value based on an appriasal. I still cant get the county to do anything even though houses on my street have drpped 15%. Been down to Tax Assessor twice and i get the run around every time .Do i have any recourse? They say they have two yrs to respond.
Posted by: Mike at 08/07/2009 02:31:34 AM
A great way to see how much money you can save on your property taxes is by checking out www.freepropertytaxreport.com They have a free search tool, they also can fix your taxes. I saved 1,620 a year.