Homeowners: Could this save you thousands in just a few hours?

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.

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.”

  6. 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?

More about...Taxes

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Seth at Ectopistes
Seth at Ectopistes
6 years ago

Good luck April!

As a renter I’m blissfully ignorant to much of this for now, but I’m curious about a couple of items. The initial assessment you received, did it contain any justification, or was it just a number?

And, if you know, what is the method by which they will reassess the value? Will they pull a new number out of the air or does someone actually come to the property?

nicoleandmaggie
nicoleandmaggie
6 years ago

We’ve protested… Once shortly after we bought the house. That was successful (we said, we bought it at this price, home prices have only gone up 2%, we think 2% is justified, they said ok). Once after we had the house inspected for a refinance. That was also successful, they just took the inspection report number. The next year we tried arguing the 2% thing again and they said no, we’d have to get another home inspection. Oddly, they’ve lowered our property taxes a couple of years when housing values went down. Of course, this year they’re back way up… Read more »

Aldo @ Million Dollar Ninja
Aldo @ Million Dollar Ninja
6 years ago

We don’t own a home yet but will soon. This is great information that we can use in the future.

I will also send this information to my mother and see if she can lower her property taxes.

Michael
Michael
6 years ago

I would say arguing over missed exemptions is right but you have to be careful about arguing over the assessed value because it could go up and end up costing you. We purchased a home last year and had our assessment go up about 15% from the previous year. The reason: we bought our house for quite a bit more than the city had it assessed (the people we bought it from did some major updates inside which would not have been taken into account by the Assessors). The other homes in our neighborhood have all been owned for at… Read more »

Mrs PoP
Mrs PoP
6 years ago

We fought ours once shortly after we moved in – then locked in our homestead (which in FL caps YOY increases in assessed values at 3%) at the reduced rate. For us, the process took more than just a few hours… paperwork, prep work, taking time off work to present our case during a formal hearing downtown, but it was definitely worth it in the long run to do so. This details how we did it, including the valuation math. http://www.plantingourpennies.com/how-we-fought-our-real-estate-tax-appraisal-and-won-part-1/ In many areas, this quote: “Also, if you recently purchased your home for much less than the assessed value,… Read more »

Toni
Toni
6 years ago

This always confuses me. On the one hand I want lower taxes with a lower assessment. On the other hand I want my house to have a good value, in case I choose to sell it (I plan to stay for a while yet), so I want it to assess higher. If I prove my roof needs work or my furnace is old, my insurance stays higher (it was recently lowered because of these upgrades). Lesser of 2 payments…

KC in ATX
KC in ATX
6 years ago
Reply to  Toni

See comment #15 below. The tax assessment is the “assessed” (not the same as “appraised”) value of your home last year, and the market value is what somebody will pay today.

Daniel
Daniel
6 years ago

Sometimes, the assessment is just wrong, too! My parents’ assessment last year said they’d converted an acre of lawn into a building, so their taxes had a huge jump. They hadn’t changed anything! Unfortunately, they missed the date to challenge, but this year, the lovable space on the assessment went back down to where it should be.

josefismael
josefismael
6 years ago

Anyone have any thoughts on what lowering the assessed value of your home does to its resale potential?

My home (purchased this last November) was just re-assessed a couple percent lower than it originally had been. Because this impacts my escrow, my mortgage lender kicked me back around $60 and lowered my payment by $15.

But part of me was still a little bummed – why is my home “depreciating” in value? Will this trend continue? What does this look like to a potential buyer down the road?

any thoughts on this would be appreciated….thanks!
jm

Juli
Juli
6 years ago
Reply to  josefismael

This is what I was wondering also. If you are planning on staying in your home long term, then lowering the value would be a good idea. But it seems like if you are planning to sell in the next few years, then wouldn’t the it be better to have it assessed higher? Or am I looking at it wrong.

Jen From Boston
Jen From Boston
6 years ago
Reply to  josefismael

I don’t think it matters, at least not in my area. The assessments are usually several months out-of-date, and the market can change by then. Your list price should be whatever the fair market price is at the time you list, and that can be very different from the assessment. The only time I can think of it affecting a home’s marketability is when the sale price is lower than the assessment, but the only time I’ve seen that happen since buying is when the housing market fell. Real estate agents tried to spin as “You’re getting a bargain!” when… Read more »

krista
krista
6 years ago

We are fighting our property taxes this year, but I hired a company to do it for me. They have a great reputation for getting prices lowered and it saves me the stress of planning what to bring and say, and taking off work to drive the hour to the county courthouse.

Sam
Sam
6 years ago

I fought an assessment and won on a piece of land that I own. It was being assessed as though it had a water view (the town values that water view at $200,000 more) and it didn’t have one. I didn’t know why it was being assessed so high, but I mentioned the assessment to a relative in the area and he said file an objection. I did and I won and that has saved me tons over the last 10 years. The process in that area was cheap and easy. But, I also had neighbors in that area, a… Read more »

mark
mark
6 years ago

My assessment was recently increased by a large amount. I appealed my appraisal and won, which reduced the appraisal to a value lower than where it started before the increase. You should document and present anything that would potentially affect the value of your home if you were to sell it. For example, we have great people on one side of us, but they have all kinds of junk in their front and back yards. I took screen shots from Google Earth showing all of their junk and pics from my windows showing how much of their junk I can… Read more »

Stephanie@Mrs.Debtfighter
6 years ago

Great info!! Luckily, our assessment value is fair for our area! 🙂

sarah @ little bus on the prairie
sarah @ little bus on the prairie
6 years ago

I’m curious to know how this applies to home builders. We are looking for a construction loan and we’re hoping that our land value has increased so that we have more equity for a down payment, but does that kill us for property taxes down the road?

cd
cd
6 years ago

Your tax appraisal value and your market value are different things. I don’t think many people use the property tax amount as a gauge for how much to pay for a home. Also, the appraised value is what your home was worth LAST year. In our county tax appraisals can vary widely (always lower) than what homes actually sell for. Supply and demand should dictate what your home is worth, and your buyer will be required to get a third party appraisal in the selling process anyway by a company that does not assess values for taxation. Most importantly, getting… Read more »

Sarah
Sarah
6 years ago
Reply to  cd

This. A lot of people confuse the terms “assessment” and “appraisal” even though they are very different things. An assessment is what your local municipality uses to distribute taxes fairly across all property owners. An appraisal is the actual market value of your home, estimated by a private appraiser who is supposed to be an unbiased party in a sale, refinance, etc.

Also, an appraiser is required to physically inspect both the interior and exterior of your home while assessors often re-assess the whole town based on limited exterior inspections and public records.

partgypsy
partgypsy
6 years ago

My mother does this regularly, as she has a house in a well-off area where houses are constantly remodeled and kept in top condition, and she has definitely not made any improvements. She files as needed for property tax reduction, and any other exemptions she can think of. This will NOT work if you have made significant remodels/improvements to your home that are not reflected in your current property taxes. In this case it is better to use their assessed value. As far as resale value,a home with a lower property tax, is a selling point not a detriment. In… Read more »

Diane C
Diane C
6 years ago

“So why do fewer than 5 percent of taxpayers challenge their assessments?” Here in California, tax assessments are based on what you paid for the property. At closing, homes are assessed at 1% of the selling price. After the first year, a property’s assessed value can rise annually to “the lesser of 2% or the state’s inflation rate”. Note this does not mean your taxes increase that much, you just continue to pay 1% of a home value that has increased in assessed value by a very small amount. There are state and local add-ons, but they still don’t amount… Read more »

Retired By 40!
Retired By 40!
6 years ago

We bought a HUD home that had an appraisal of roughly 1/3 of the assessed value. We protested the taxes (they are more than our mortgage, go figure) but they county refused. Where would we go from there?

Deenz
Deenz
6 years ago
Reply to  Retired By 40!

We had the same issue with our county. We bought our house for about 15-20% below tax assessed value, contacted the assessor’s office, and were informed that no changes can be made between the 8 year cycles of appraisal review. We had missed the “window” to protest, even though we had just bought the house. Not every area has this nice way to save money. (Total “lost” would be about $3,000 to date)

Maureen
Maureen
6 years ago
Reply to  Deenz

You can grieve your taxes every year. You can look it up in your county or state website, probably under assessment and grieving your taxes. I know my county in NY will re-assess everyone’s taxes every 10 years. But you have 1 chance every year to grieve that assessment. Just be sure to have comps and your purchase price and any information you think necessary to appeal (the more info, the better). Once a year you go before the town board on a particular date and state your case. They must send a letter stating if they agree with you… Read more »

Kingston
Kingston
5 years ago
Reply to  Retired By 40!

My county has a reputation for ALWAYS refusing to reduce an assessment, unless they are sued. I’ve heard of people successfully suing to reduce the assessment, but that, of course, costs $$ to undertake. If the potential long-term savings were large enough, though, I’d talk to a lawyer.

Mel
Mel
6 years ago

The process around here is for the assessors to thoroughly go through one house per area then do drive-bys of the rest and base the assessments on the baseline house. So you have to check to make sure they haven’t misidentified something, like calling my overlarge shed a garage or adding my mom’s porch into the house’s square footage. On the other hand after the last assessments everyone I knew who challenged the assessment ended up with having it increased. The town was in a nitpicky mood.

Amy C
Amy C
6 years ago

I have protested many times. I have a small 848 square foot house surrounded by 1000+ square feet , a little fish in a big pond of houses. It get compared to brick house and 2-3 bedroom houses, attached garages. Usually I have won most of the time, if not won, got it reduced greatly. If serious about protesting, go to your county web site that has the property to view, look at all current house sales compared to your house stats, try to find 3-4 comparable with your house, come up with your own evaluation of market value, and… Read more »

mrs bkwrm
mrs bkwrm
6 years ago

I think my house is appraised too high. I paid under $10K for it and they’ve appraised it for over $40K. However, house taxes are capped at 1% in my state. I think what they want is a fair, considering that my kids go to public school, my garbage gets collected weekly, I want emergency services to help me if I have an emergency, etc.

Gman_67
Gman_67
6 years ago

Lower the APR on your credit card?!? That doesn’t get you rich slowly…paying any interest AT ALL on credit cards gets SOMEONE ELSE rich, not you!

Brian
Brian
6 years ago

What’s the homestead stuff?

Jeremy
Jeremy
6 years ago
Reply to  Brian

Hi Brian, if you own a property and live in it as your primary residence, most tax districts allow you to file a ‘homestead exemption’. This will limit or cap either the amount of property taxes or the rate of growth of those taxes. This is really useful in districts where property values can dramatically climb in a short period.

Tom
Tom
6 years ago

In Pima Co., AZ the assessor requires all appeals to be based on sales comps in the owner’s area (in rebuttal, the county will use comps from all over a much wider area), and seems to totally ignore their own property valuations in the county records for adjacent properties. I’ve made many appeals and won a few, but never did the outcome produce a realistic assessed value comparable to neighborhood comps. I won’t give up, but in this county the owner is fighting a severely uphill battle.

Daria
Daria
6 years ago

I live in Williamson County, Texas which has a reputation for being very difficult to work with in lowering your assessed values. I have protested for the last five years and each appraiser seems to make up his/her own rules. One year the appraiser threw out the comps because he said they were too old (there were not many comparable sales in my area) and he was using comps from homes not in my neighborhood. This year, the appraiser wouldn’t take the comps from Oct, Nov., and December that I brought because he said they were not in his system.… Read more »

Summer Lee
Summer Lee
5 years ago

April, what was the outcome on arguing the homestead cap? From what I have read the 10% cap does not apply until the second year after you apply for the homestead exemption on the property.

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