How I paid less in property taxes

Today I present the second and final installment of my property tax saga — the informal hearing. (You can check out the first post here.)

To briefly recap, I'm a new homeowner and my assessed property value shot up by 31 percent from last year. So that, along with the fact that I have a tax-protesting father to please, landed me in County Appraiser Brad's cubicle for an informal hearing.

The bad news

First, County Appraiser Brad pulled up three comparable properties, meaning they were in my general area and fairly close in size, year built, etc.

“Well,” he said, “the thing is, you bought right before we hit a seller's market. So you got a great deal, but now you can see that similar properties in your area sold for much more, because a seller's market means higher sales prices.”

He showed me the comparables, and how the values compared to my house when adjusted for the market and differences in square footage and other improvements.

“So you can see here that what your property is assessed at is actually lower than the average of these comparables,” he said.

Hmm. This wasn't looking good.

“Okay,” I said. “But I thought that property taxes on a homestead couldn't increase by more than 10 percent from one year to the next. That's what I read on the county's website. Does that not apply here?”

“Were you living in the house on January 1 of last year?” he asked.

“No, we closed on January 18.”

“Well, you have to be living in the home from January 1 for that 10 percent rule to apply.”

“Huh,” I said. “So I miss it by 17 days and my taxes can go up 31 percent? That is sneaky!” (I said this in jest, and it seemed to amuse him.)

Knowing that I didn't really have an argument on those points, I moved on.

My Hail Mary

“Okay, Brad, but I have this other issue,” I said. “When my septic system was inspected, the inspector said she recommended a full replacement. The system is 40 years old, too small by today's standards, and it had a leak. When she found out that the city was annexing our area, she said that repairing the leak would suffice until city sewer was available.”

County Appraiser Brad asked for the septic inspection report, which I handed over.

“Well,” he said, “the problem is that the septic is working right now.”

“So I would have to have a non-functioning septic system right now to get my property value lowered?” I asked. This seemed kinda crazy to me. If the septic wasn't working, I'd of course have to have it replaced or fixed immediately. The point was that the thing was running on borrowed time.

“Okay, do you have an estimate to have it replaced?” he asked.

“No, we're not going to replace it,” I said. “We're going to hook up to the city sewer now that it's available.”

“Do you have estimates to do that?”

Ugh. No, I didn't. I knew I should have done that, but I just plain forgot. Also, the city just finished installing the pipes on our street not too long ago.

“We're just now in a position to have the work done, so no, I don't have estimates with me,” I said. “I could get that this week…”

“You would have had to have brought it in today,” he said.

“I've talked to my neighbors, and they've paid between $8,000 to $12,000, depending on how far back their house is from the street,” I said. (This was 100 percent true, but I knew that without an estimate in hand, my argument was pretty weak here…)

“Okay, how about this?” he said. “Since you don't have estimates, I'll split the difference and take off $5,000.”

“Sold!”

“You drive a hard bargain, April Dawn.”

The recap

So $5,000 off isn't too bad. I certainly felt it was worth my time, especially because next year my assessed value could go up as much as 10 percent. That means that keeping the value as low as I can saves me money now and in the future.

In review, the best thing I did was to bring documentation about a major repair/replacement issue — the septic system. On the other hand, my biggest mistake was not getting written estimates before my hearing for connecting to city sewer. Had I done that, I probably would have been able to lower the assessed value even more. Lesson learned!

One last thing…

Finally, I want to touch on something that I should have explained better in my first post about property taxes.

In the comments on my previous post, some readers had questions about whether it's a good thing to have your assessed value lowered.

“It seems like if you are planning to sell in the next few years, it would be better to have it assessed higher,” wrote one reader, “or am I looking at it wrong?”

And reader “cd” had a great explanation:

“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 the value lowered works the same as compound interest. If you get it lowered by 5 percent one year, that's less you pay every year forward. In addition, if they raise prices as a percentage of your current home value, then shaving dollars off that value saves you money in future increases as well. It's a no brainer for a few hours of work.”

That actually clarified a couple of things for me too!

So, readers, that's what the property tax protest process was like for me. I'm happy with the result, especially because I think County Appraiser Brad was being pretty lenient. And that reminds me of one final tip: Be nice. Appraisers are people too, and they're not out to screw you over.

On that note, maybe don't accuse the appraiser of being sneaky, although it seemed to work out okay for me. It's a judgment call, really.

More about...Taxes

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FI Pilgrim
FI Pilgrim
6 years ago

Good insight April, thanks for sharing your experience! I’ve only appealed my assessment via phone, which was simple, I’ve never actually shown up for a hearing. This gives me confidence that I could be OK doing that though!

Kristin
Kristin
6 years ago

So April – how much did a $5000 reduction in assessed value decrease your actual tax bill?

Jason
Jason
6 years ago
Reply to  Kristin

A $5,000 reduction would save me $74 in my area. Not sure I agree that you will experience these savings year after year as they will try and reassess your property value each year……..

rnr
rnr
6 years ago
Reply to  Jason

Jason,

You’re right, but money is money.
Now, your time may not be worth that.
But the education is worth it, to me.

And they will try and creep it up every year.
That’s why you have to be an engaged, alert taxpayer …

🙂

Marsha
Marsha
6 years ago
Reply to  Jason

In my area, they don’t reassess every year. New assessments in off years are only done when property changes hands. In the 18 years we’ve owned this house, the assessment has only changed twice. We’re on year 5 with the current assessment. So even $75 a year can add up.

Kristin
Kristin
6 years ago
Reply to  Jason

I think in April’s case, (and of course in many others) it makes sense to grieve one’s taxes. I just didn’t want anyone to get the impression that a $5000 reduction in assessment would result in a huge savings right away. A $5000 reduction in assessment would save me about $185 per year in my high tax state (NY) where my combined county/city/school tax rate is about $37/$1000 of assessed value.

Retired by 40
Retired by 40
6 years ago

Crazy! I guess $5,000 off the appraised value is better than nothing!

jeremy
jeremy
6 years ago

I actually just went through this process myself with my local tax assessor office. In my county, you sit before a review board which consists of three independent members, who are not employees of the county, but appointed and a fourth member who is the local appraiser and a county employee. You walk into the review room, and you get to witness the hearing of the people in line before you. The first two individuals before me got nothing off their assessment. One came in with a lot of photos of damage to her house, but no estimates. The second… Read more »

James Salmons
James Salmons
6 years ago

We all have attitudes that can limit or enhance or options for success with money. Our feelings about negotiating is one that can have quite an impact. When my sister was a child she hated to go shopping with my grandfather because he would do what he called “haggling” over the price. But now she is a great negotiator, even if it is just the price at a garage sale. Personally I have saved a lot of money over the years, as much as a hundred dollars over a single purchase. Many people would have shrugged their shoulders and only… Read more »

rnr
rnr
6 years ago

You probably got the best deal you could. I’ve fought for a cut, and won it, based on comparables. However, it’s always interesting to me how the rules always favor the taxing authority – as in, you didn’t bring in an estimate TODAY. When I presented, they said “thank you, we’ll be in touch in a few weeks.” I was like “well, have I got my ducks in a row?” One of the three men on the panel chuckled and said “Yes, you have your ducks in a row.” My father-in-law served on a board of review here in Michigan,… Read more »

cheapcookies
cheapcookies
6 years ago

I sat on a Town Board for 12 years and am very familiar with the assessment and tax process. In NY State, tax reduction requests are first filed with the BAR (Board of Assessment review), then a small claims action can be filed if no agreement is reached, and finally a lawyer filed certioriari (cert). I went one step further when a resident called me to complain about their assessment: I made an appointment with the assessor and the resident and sat down with both. First I asked the resident to explain why his assessment was too high, and then… Read more »

A-L
A-L
6 years ago

Last year we successfully appealed our assessment. They only have a small window of time (two weeks a year) when they allow the appeal. We used the assessor’s own values for properties around us as the main basis for the appeal. In particular, our next-door neighbor’s house was virtually identical (except we have a finished ground-level basement apartment which the neighbor does not have). The neighbor’s property was assessed for $100k less than ours. The appeal process was done online, and the key was one of our appraisals that showed the square footage with a map of the building. Apparently… Read more »

A Frugal Family's Journey
A Frugal Family's Journey
6 years ago

Great article…thanks for sharing your experience.

We’ve successfully appealed our property tax assessment twice since we’ve moved in. I think the key to our success was attaching three comps in the area. We got the comps from a local realtor via e-mail and printed the comps directly from the e-mail to show that the comps are legit.

Mark E
Mark E
6 years ago

Thanks Jeremy!

Mario
Mario
6 years ago

I like that he did you a favor even though you didn’t have the estimates on you. All in all, it’s good to get lucky every now and then when it comes to money 🙂

cd
cd
6 years ago

LOL.I think that was the first and only comment I’ve ever made on a blog. Thanks for the recognition and I’m glad if it was useful for others.

Marie
Marie
6 years ago

I was under the impression that real estate tax was based on the size of our property, not the value of our home. The tax bill actually states the dimensions of our plot. I wonder if I was mistaken, and have the opportunity to argue for a lower bill? I will have to do some homework.

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