As a property owner, you're held responsible for making your property tax payments on time. However, the situation might arise that you end up overpaying your taxes. Although each jurisdiction is different, you'll likely be able to get your overpaid property taxes back. Depending on how or why you overpaid, there might be a formal process involved to get your money back.
Under most circumstances, you will be able to get your property tax overpayment refunded.
Understanding Property Taxes
Local governments, such as those of counties and cities, impose property taxes on the owners of real property. The funds generated from property taxes are used to pay for many different public services, including road maintenance and schools. Your tax bill is calculated based on the taxable value of your property, multiplied by your jurisdiction's tax rate, or millage. Each tax collector has a method of assessing properties to determine the taxable value, and reassessments are generally performed each year or every few years.
Mistaken Property Tax Overpayments
If you mistakenly overpay your property taxes, you'll be able to get it back from your tax collector in most cases. Mistaken overpayments might happen if you read the bill incorrectly and paid too much, or if you accidentally paid the bill twice. Some locations, such as Harris County, Texas, will hold all overpayments for a period of time until the funds are claimed. After the time expires, the money goes into the county coffers.
Filing Assessment Appeals
A more common problem is when your property is assessed for a greater value than you believe to be fair. In this situation, you'll need to file an appeal against the tax assessment. If your appeal is successful, the value of your property will be decreased. Some locations will refund the money you have been overpaying. Because the appeals process is specific to the tax jurisdiction, review your assessment letter or contact the tax collector's office for more information.
Established Escrow Overpayments
Mortgage lenders commonly require borrowers to establish escrow accounts for property taxes and insurance. Each month, you pay a portion of your entire tax bill on top of your mortgage payment. The extra funds are moved into the escrow account until the tax bill is due, then the lender pays it on your behalf out of the account.
The lender estimates how much you pay each month by estimating your total tax bill and dividing by 12. It's possible for them to overestimate, or for your tax bill to actually decrease. At the end of the year, the lender reviews your escrow account to provide you with a statement. If you have a surplus of funds greater than $50, the lender must issue you a refund. If the surplus is less than $50, the lender is allowed to apply that to the next year's escrow payments. This will decrease your monthly payment by a few dollars.
- Harris County Texas: Property Tax Overpayments and Outstanding Refund Checks
- Franklin County Ohio: Search for Payments
- Kiplinger: 8 Steps to Appeal Your Property Tax Bill
- American Homeowners Association: Escrow Refund
- Corporate Finance Institute. "Ad Valorem Tax." Accessed Feb. 4, 2020.
- Tax Foundation. "Property Taxes." Accessed Feb. 4, 2020.
- Internal Revenue Service. "General Instructions for Certain Information Returns." Accessed Feb. 4, 2020.
- Tax Foundation. "Tangible Personal Property." Accessed Feb. 4, 2020.