During the housing boom, property taxes soared along with home values. Now that home prices are retreating, you'd think that tax relief would be around the corner.
Don't count on it. When home values drop, you could see lower taxable values in the next reassessment. "But by that time, local governments may be in enough of a pinch to raise the rates that apply to those taxable values," says Pete Sepp, of the National Taxpayers Union. "That's why, through good times and bad, property-tax collections just seem to keep going up."
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You may not be able to control local tax policy, but you can at least do some checking to see if your property-tax assessment is realistic. Sepp estimates that as many as 60% of homes are overassessed.
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Review your home assessment for errors
Find out how your district levies property taxes -- on 100% of the market value or some fraction of it -- by calling the assessor's office. Fractional assessments are less common than they used to be, but plenty of localities still use them. Especially at 70% or 80% of value, owners may not realize their property tax assessments are out of line.
Next, go to the assessor's office or Web site to see the property card that lists the details of your home. Check each item for mistakes, from the number of bathrooms to the number of square feet. Valuing properties is "a very inexact science" to begin with, says Richard Roll, president of the American Homeowners Association (AHA). But when paper records were transferred to computers, many errors were made -- or retained. If there's a mechanical error, the home assessor may offer a property tax reassessment on the spot.
Compare property tax assessments for similar homes
Pull the property cards for neighbors who have similar homes in terms of age, style and features. Sepp advises comparing five to ten properties with yours. If the assessments on similar properties are significantly lower -- 10% or more -- you have a good case based on uniformity. "The assessor is responsible for maintaining equity among owners," says Thomas Branham, a tax consultant at Marvin F. Poer & Co., in Arlington, Va., and a former property-tax assessor. Use Zillow.com or RealEstate.com to compare estimated home valuations.
Build a case for reassessment
The rules for property tax appeals vary from place to place, but no matter where you are, you'll need evidence. Property cards and Web-page printouts are helpful, and photos can be especially useful if you're comparing the condition of your home with others. Consider getting an independent appraisal as well, but check the rules in your jurisdiction before laying out a couple hundred dollars or more to pay for one. Some localities require appraisals; others don't allow them.
You generally have 30 to 60 days after receiving your bill to appeal the property tax and present your evidence for an administrative review. If you aren't granted a reduction, the next level of appeal is an independent board. This is typically free but may involve a filing fee of $20 to $50.
Your last resort is a judicial hearing, usually in circuit court. But Branham cautions against taking your appeal that far. It's expensive -- involving filing fees, legal fees and possibly a witness fee for an expert appraiser -- and the cost may outweigh the relief you'd see on your bill. For more information, including forms to help organize your appeal and contact information for your state, get the AHA's Homeowner's Property Tax Reduction Kit ($29.95, or free with trial membership at www.homeownertaxcut.com).
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