In the vast majority (if not all) tax jurisdictions, property taxes are based on the assessed value of a home or commercial property. A reduction in property value should, theoretically at least, result in an automatic reduction of property taxes. Things don’t seem to work that way, however, since even when property values are plummeting downward the states and municipalities involved see their costs continuing to climb. As a result, home owners who want their property taxes lowered must be proactive about it.
Understand how your property taxes were computed.
Property tax assessments are largely based on two factors: the applicable tax rate (which is known as the “mill rate" or "millage") and the assessed value of your property. While there’s not much you can do to alter the prevailing tax rates, you can challenge the assessed value of your property. Before you can determine if you have really been overtaxed, it’s important to read your tax bill and understand how it was computed.
Once you have developed some understanding of your property tax bill, check closely for errors on your property tax assessment. Visit the assessor’s office and review the record of your property. That record will likely include a detailed inventory of your property, together with its location, size of lot, condition, number of rooms, improvements, outbuildings, garages, type of construction, amount of land area and whether you have a swimming pool. Every piece of information that the assessor used to compute your property tax assessment should be there for you to review. Your job is to look for inaccuracies that would have increased property value. Is that swimming pool you filled in long ago still listed on your assessment? What about that barn or separate garage you tore down? Such details can make a significant difference in a property tax appraisal.
Next, compare your property tax assessment to comparable homes in the community to see how closely your property tax assessment matches those of similar properties in your area. This analysis of comparable properties, while more subjective than simple assessment value, can still be proven once proper information on comparable homes and their assessments is brought forth. “Parity” (or fairness) is a key factor that most localities consider in determining property tax assessments. If all the homes in your assessment area are overvalued by 15 percent and yours is too, your case wouldn’t be nearly as strong as if your home was assessed at 25 percent over values while others were at 15 percent.
If, after a careful review of the facts involved, you believe your home is over-assessed either as a unit or in comparison to other homes, it’s time to begin the property tax appeal process. Though the property tax appeals process may vary between jurisdictions, the right place to start is with the tax assessor. If you don’t get satisfaction there and continue to feel that you have a case, inquire about the property tax appeals process for your jurisdiction and follow it up to the top. It may be worthwhile, in this process, to hire the assistance of a professional appraiser to strengthen your case for a property tax reduction.
- Challenge Your Taxes: Homeowner's Guide to Reducing Property Taxes; James E. A. Lumley; 1998
Cari Haus has authored or co-authored a score of books on topics ranging from business and health to parenting, faith, and life. After earning a B.B.A. from Andrews University in 1982, Haus became a C.P.A. in 1985. Lately she has been writing business articles for the newsletter Real Estate Advisor.