You know all those great tactics to save huge chunks of cash — the tactics that don't require you to scrimp and save? I'm talking about things like lowering the APR on your credit card or getting a better deal on your car insurance — paying less for the stuff that's kind of a drag to pay for in the first place.
Well, as a new homeowner, I've been working on lowering one of those no-fun expenses: property taxes.
Two weeks ago, I wrote about how I was surprised that my assessed house value was 31 percent higher for 2014 than it was in 2013 — and that I had filed the paperwork to protest that assessment.
Flash forward to today, and I have a hearing scheduled for next month. As I mentioned, I'm a new homeowner, so this is my first experience with protesting property taxes. But being my father's daughter, I consider it an absolute must-do. My dad takes pleasure in this process and actually seemed to be a little bummed that he didn't have to protest this year because his taxes stayed the same. I half suspect that the county officials just wanted a year off from meeting with my dad.
So, not only did I file a protest to save money, but I also had to do it so I could proudly update my father on the state of my property taxes. I think he's living vicariously through me this year. But, as it turns out, when it comes to fighting the property tax fight, I'm in the minority. I guess the vast majority of homeowners don't have a tax-fighting father to please?!
“Typically, fewer than 5 percent of taxpayers challenge their assessments, even though the majority who do so win at least a partial victory when properly prepared,” according to the National Taxpayers Union (NTU). “Statistics vary by area, but experts estimate that between 30 and 60 percent of taxable property in the United States is over-assessed, and this leads to higher property tax bills. Middle- and lower-income taxpayers are among the most often over-assessed.”
That means that many taxpayers are paying thousands of dollars more than they should. And the kicker is, many times protesting taxes is a fairly simple process. For instance, an NBC News article reported that one homeowner successfully protested his taxes, “pinning his home's new market value at $381,600, a $109,000 drop. [The homeowner] saved $4,306 in taxes each year after a few hours of work and a 10-minute conversation.”
So why do fewer than 5 percent of taxpayers challenge their assessments?
Many times, homeowners simply forget to do it. The deadline for filing a protest comes and goes. “‘People forget they need to appeal,' said Barbara Payne, executive director of the Fulton County Taxpayers Foundation in Georgia, to NBC News. ‘Everyone should have appealed more than once in the last five years or you're paying too much.'”
Other times, homeowners assume it's not worth their time. There's paperwork, gathering supporting documents, a hearing scheduled in the middle of their workday — and for what? Possibly for nothing, if the county refuses to budge.
And to some extent, the homeowners who think they won't save money are right, though not for the reasons they probably think. “Winning an appeal doesn't always save you money,” according to the NTU. “Since property taxes account for nearly 45 percent of general revenue collected by local governments, municipalities make up the difference by raising taxes somewhere else — usually in the form of higher sales taxes.”
You might not be able to directly control your sales taxes, but it's still in your best interest to make sure your property is being fairly assessed.
How to lower your property taxes
So granted, I'm a newbie to this process. But I'm nothing if not an avid Googler, so here's what I've gleaned from Kiplinger's guide, the NTU, and other sources.
Mark any deadlines for filing appeals on your calendar. I actually put these on my Google calendar as a recurring event. While it's possible for deadlines to change from one year to the next, the recurring event will at least serve as a reminder if I don't get an assessment notice for some reason. And that does happen. This year I didn't receive my assessment. It went to an old address left by the previous owner. Being a new homeowner, I was lucky that it randomly dawned on me that we hadn't received a tax assessment! If you missed the deadline this year, at least be sure to take this step for next year.
Check the accuracy of the assessment. Make sure the property description is accurate, the math works out, and that you are receiving all of the deductions you are entitled to. In my case, I saw that I hadn't received my homestead exemption, even though I filed the paperwork. I called the county and found out that they were simply behind on paperwork. In less than five minutes, the rep processed my homestead exemption paperwork.
Read the tax assessment guidelines. These are probably all online these days, making it easier than ever to familiarize yourself with how taxes are assessed in your area. For instance, I learned that in my county, property taxes can't increase more than 10 percent on a homestead from one year to the next (which is why I made sure they'd processed my homestead exemption). That was a point I included on my protest form.
Research comparable properties in your neighborhood. “Look at property cards for homes of similar age and square footage with the same number of bedrooms and bathrooms,” writes Lisa Gerstner for Kiplinger. “You may be able to find the records on your assessor's Web site.” If those homes are assessed considerably lower than yours, document the addresses and use those as evidence during your appeal. Also, if you recently purchased your home for much less than the assessed value, you can use your settlement statement as evidence.
Gather repair estimates and photographs. Gather inspection reports and any other evidence of problems in your home, things like roof damage, cracked foundations, plumbing issues, etc. “Remember that appraisals are often arbitrary guesses not based on site visits or specific information about a property,” writes Dave Lieber for The Dallas Morning News. “That's where you come in. The appraiser who gave your property a value hasn't been inside your house and doesn't know what kind of problems you may have.”
Fill out and submit the protest form, along with your supporting evidence. “Rules vary by locality, but your assessment letter should explain how an appeal works,” writes Lieber. “You may be able to negotiate a settlement informally before the assessor completes the rolls and get a reduction right away. If you can't come to a settlement, be sure to pay your tax bill to avoid penalties or a lien on your home. You'll get a refund in some form if the county eventually approves your appeal — possibly a check or reduction in your bill in future years.”
I'll be sure to update you on this process as I go through it; but in the meantime, I'd like to hear from you. How often do you protest your property taxes? If you've protested, what did you do to argue your case, and were you successful?
Author: April Dykman
As a freelance writer, editor, and blogger, April Dykman specialized in personal finance, real estate, and entrepreneurship topics. Her work has been featured on MSNBC, Fox Business, Forbes, MoneyBuilder, Yahoo! Finance, Lifehacker, and The Consumerist. Now she does direct response copywriting but, in her free time, April is a wannabe chef, a diehard Italophile, and a recovering yogi.