If your property tax is aligned with or assessed based on the value of your home, a swing in property values could warrant close scrutiny of your property tax bill.
Some more progressive tax jurisdictions will make the adjustment for you — up or down — but most only move your rate up or they’ll wait for the property to change hands before adjusting the tax.
Even where adjustments are automatic, you still may not be satisfied and will need to appeal the deal.
Over valued or over assessed property is perhaps the most common and successful grounds for challenging your tax bill.
When the economy is faltering and spawning foreclosures, short sales and homeowners otherwise bailing out of homeownership, consider it a red flag — it’s time to scrutinize your property tax bill.
Many homeowners bailout, accept the foreclosure or take the short sale way out because their mortgage is more than the value of the home, which may have fallen for a variety of reasons.
The incidence of incorrectly calculated property tax bills may also warrant a close inspection of your property tax bill or an appeal.
Many errors in calculating your property tax bill also stem from clerical mistakes according to the American Homeowners Association (AHA) which, along with the National Taxpayers Union, offers a low-cost kit to help you check our property tax’s accuracy and, if necessary, attempt to lower your levy.
Visit the Federation of Tax Administrators (http://www.ntanet.org) to pinpoint your property tax jurisdiction, records and procedures.
Tell-tale signs your property tax could warrant an adjustment include:
- Errors in the description of your property on the tax bill.
- Compatible homes in the area that have sold for less than your appraised value.
- Neighbors with lower assessments on similar houses. Keep in mind some homes retain the same assessed value for years and assessed values often don’t rise or fall in step with market values or home sale prices.
- Value reducers in your home or area, including drainage problems, easements, re-zoning, heavy traffic, nearby railroad tracks, freeways, industry or toxic waste.
- Depreciation factors, including the quality of materials, inefficient heating, structural cracks, deterioration, or chronic defects.
When you examine your tax records in the local assessor’s or property tax office to make sure the information is complete and accurate also ask yourself:
- Did you buy your home in a bidding war? An overvalued property is an over assessed property.
- Are there errors in your tax records? Look closely at your records and make sure there aren’t reporting errors. A condo listed as a single-family home, square footage that’s off, too many rooms and more can falsely boost assessed value.
- Do the math. Many states put a cap on how much above the market value an assessment can be and how much it can rise each year.
If you need to appeal the assessed value and related property tax, prepare yourself for a time-consuming ordeal.
In most cases the process is free for taxpayers, but you may want to enlist the aid of a licensed professional to assist you.
Typically, you’ll have to find three, five or more comparable homes in your neighborhood that have lower assessments. Obviously, the lower the better. Also, the more comparables, the stronger your case. Truly comparable homes are homes nearly identical to your home’s floor plan, age, lot size, improvements and other factors.
The information is largely public and available, with some digging, from your tax assessor’s or property tax office, but you can hire a real estate agent or other professional with access to your local multiple listing service. They can quickly generate a comparable market analysis of homes both recently sold and those in escrow to hone in on your home’s true value.
An appraiser with multiple listing service access can do the same, as well as perform an appraisal of your home.
If you hire a professional you could be out a few hundred dollars. Don’t make a case if you don’t think it’s worth the cost to appeal.
Approach the appeal objectively, not with an adversarial chip on your shoulder. You only want your due, not to incite the property tax system.
If at first you don’t succeed, be prepared to appeal to a higher authority.
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