Homeowners love rising home values -- until, that is, the annual property tax bill arrives in the mail. If yours makes you wince, it's time to consider whether the property tax assessment is accurate, and if not, find out how to appeal it.
Property tax appeals are increasingly popular today because of the sharp decline in house values throughout most of the country. Not all tax assessors have kept up with the changes, which means some homes may be overvalued and thus overtaxed.
If you want to appeal the assessment, your first step is to find out what level of government is in charge of your property's valuation. It may be the state (most states tax property, says John Brusniak, the president of the National Association of Property Tax Attorneys in Dallas), or it may be the county, city or town, school district or utility district. Typically, this information is printed on your tax bill.
You get one shot per year
Your other first step (if two such top priorities may be allowed) is to find out the yearly deadlines to appeal the assessment. Deadlines are crucial. The process typically comes to a halt, without further recourse for you, if you don't turn in the proper paperwork on time or if you neglect to show up for a hearing on the required date.
"There might be some specific, small 'outs' in various places, but for the most part, if you blow a deadline, you're done for the year," Brusniak warns.
The deadlines may be printed on your tax bill. If not, a telephone call to the assessor's office or a little online research should produce the information.
'Comps' trump other data
The next step is to gather data about sales of homes that are comparable to yours. These "comps" should be located in your area, be approximately the same size as your home and have similar features. The data points for each comp might include the address, date of sale, sales price, square footage and amenities. Pictures may be helpful as well.
Comps are important because they're used to establish your home's fair market value on a certain date, based on data specific to your property, rather than a function of the "mass appraisal" approach often employed by tax assessors.
"Under mass appraisal, (tax officers) generally value an entire neighborhood based on the data they have and then sort of homogenize the values across all the properties. When (they) do that, (there will be) errors, because your property may not be like the properties near yours," Brusniak explains.
The tax assessment authority's office -- or its website -- is a good place to find comps. A website operated by a local multiple-listing service (such as Realtor.com on MSN Real Estate) also may be a good resource. Keep in mind that some sites may be incomplete or contain outdated or erroneous information. A search of several databases, based on the parameters of your home, should turn up some useful results.
Appeal can take months
The property tax appeals process can take place at multiple levels, such as a written form or request for a review, a citizens' panel, an assessment appeals board or other forums. Each level will have its own rules, guidelines and deadlines, set by law or the tax authority.
The first opportunity may be a chat with the local assessor, while the last resort could be a full-blown lawsuit, according to Bruce Woodzell, the president of the International Association of Assessing Officers in Charlottesville, Va.
How long the entire process will take depends on local resources. In some places, homeowners receive a final resolution within a few months. Elsewhere, an appeal can take a year or longer.
The process is data-driven, so homeowners should avoid emotional arguments. Assessors generally have "no connection whatsoever" to setting property tax rates or collecting property taxes, so going in angry or pleading for a reduction is unlikely to succeed, Brusniak says.
"Information speaks volumes," Woodzell adds. "If you have hard facts, if you have sales data, and if you have all your information right, it really helps."
Some jurisdictions offer a tax break if you occupy your home as a principal residence, are elderly or disabled, or meet other qualifications. Generally, you must be proactive to claim these benefits, Brusniak says, so call the assessor's office and ask. Again, a missed deadline may very well mean no tax break for that year.
Most homeowners can contest their property taxes on their own, or perhaps with some help from a local realty broker. Only rarely is an attorney or private appraiser necessary to the process.
"For the most part, this is a thing you can do yourself," Brusniak says. "If you have a $5 million property that's a really complex issue, then perhaps you ought to bring in an attorney who can help you."
The possibility that an appeal could trigger a higher valuation might spook some homeowners, but Brusniak suggests the risk is small.
"Can it happen?" he says. "Yes. Does it happen? Rarely. Generally that's when there has actually been a valuation error."
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