How to keep property taxes in check

Your bill seems too high? It could very well be. Here's how to make sure you pay no more than your fair share.

By Dennis Murray
Senior Editor

Odds are you're throwing away hundreds of dollars a year on your home and property. But before you blame poor insulation, an old boiler, or leaky faucets, look at your tax assessment. It may be the biggest financial drain of all.

As much as 60 percent of all taxable property is overassessed, according to the National Taxpayers Union, a consumer advocacy group based in Alexandria, VA. Yet fewer than one in 50 taxpayers mounts a challenge. That's unfortunate, because most people who do win at least a partial victory. Depending on where you live, you may even get a refund for the years your property was overassessed.

"Never assume your assessment is accurate," says Pete Sepp, a spokesperson for the National Taxpayers Union. "Some property valuations are conducted from the window of a moving vehicle, so key information about the size and features of your home or office may be documented incorrectly." Moreover, municipalities often hire college students and other nonprofessionals to do the inspections.

If your property is overvalued, you'll pay too much tax until the next assessment takes place—which may not happen for 3 years, or even longer.

To judge whether you're getting a fair shake, first compare your property's assessed value with those of similar properties. Because assessments are usually public information, you have every right to examine the worksheets on file for other properties. Review at least five, to get a good feel. You may not even have to visit the assessor's office to do so; more and more large communities are offering assessment data online.

Another helpful tool is Domania's Home Price Check (www.domania.com ), which includes records of more than 26 million home sales in 37 states and allows you to look up suggested assessed values. (In 13 states, nondisclosure laws and other barriers prevent the publication of such information.)

Print out or make copies of whatever records you can, and take notes on whatever you can't. If you later decide to file an appeal, you'll likely need to present this information as evidence before the local tax board.

Even if the comparisons suggest the assessment is reasonable, digging deeper could cut your tax. That's because the assessed value often isn't equal to the property's appraised, or market, value. Usually it's a percentage of the market value and, although the assessment ratio is supposed to be the same for all properties, it isn't always.

Sometimes there's been a simple clerical error—an old ratio has been used, for example. So if you suspect a discrepancy, first call the assessor's office to find out what the percentage is supposed to be, and to make sure your assessed value really represents that percentage of the market value listed on your tax bill.

If the wrong assessment ratio was used, generally you need only point this out to your local tax assessor—either in person or in a letter—to get relief.

Consider hiring an expert to represent your interests

What if the market value your assessment is based on seems too high? Then you'll need a new appraisal to confirm your suspicions and better support your argument. This will cost around $400 for a home and as much as $2,500 for a large medical building, but it will be the most helpful document in your fight against an unfair assessment.

Be sure to hire a certified appraiser, someone who's a member of the Appraisal Institute (www.appraisalinstitute.org ) or the National Association of Master Appraisers (www.masterappraisers.com). A real estate office should also be able to recommend someone good.

Next, you'll have to file an appeal with your local taxing authority. Find out your municipality's rules and deadlines before you file, though; some, for example, won't change an assessment unless it's incorrect by a minimum percentage, generally 10 percent. Also, appeals boards usually review cases only during a specific time each year. Your town or county can fill you in on the filing procedures and deadlines. It may even have a Web site that details them.

"On the forms you're required to complete, don't call attention to the fact that you're a physician by adding MD or DO after your name," advises attorney David J. Schiller, of Norristown, PA. "You won't garner much sympathy from the tax assessor, who probably earns much less than you do."

After you've filed the necessary documents, you'll have to appear before the local tax board. You can represent yourself, but if you believe your potential savings may be significant, consider having a tax attorney or the person who reappraised your property accompany you. (Some tax boards require the appraiser to appear with you.) Either will likely be familiar with the biases and idiosyncrasies of local boards and will be able to best present your case. Charges for these services vary. Some experts bill by the hour or case. Others work on a contingency basis, earning a percentage of your savings.

Even though you may spend more than $1,000 preparing your challenge, the good news is that the hearings are usually amicable and end satisfactorily for the property owner. "The goal of an honest tax assessor is to work with you to arrive at a fair value for your property," says Chris Rogers, president of Rogers Realty & Appraisal in Tupelo, MS.

Be as cooperative as possible. "If you're married, bring your spouse to the hearing," Schiller says. "This shows how important this appeal is to both of you, and that you're taking it seriously. But let the appraiser or attorney present the evidence. I once had a client who sabotaged his hearing by badmouthing the community and claiming that the tax assessor was incompetent."

Get directly involved in future appraisals

Whatever the outcome of your appeal, you'll want to take steps to make sure your next assessment is fair.

The best strategy: Make sure you're present when the property inspection takes place. That way, you can point out anything you believe could lower your property's value. Those things might include unfinished rooms; antiquated heating, cooling, or plumbing systems; water, termite, or structural damage that has occurred since the last appraisal; or structures that you've removed, such as a swimming pool, greenhouse, or fence.

Even the style of your house can lower your taxes: If you own a contemporary surrounded by Victorians, you could argue that your home will be more difficult to sell based on its appearance.

Don't be afraid to point out flaws; if you later decide to sell, you can make any necessary repairs. For now, you want to do everything you can to convince the appraiser to value the property fairly.

 

Dennis Murray. How to keep property taxes in check. Medical Economics 2002;11:78.