Monday, October 3, 2011

Appeal Your Property Taxes in 5 Easy Steps

Many people that bought houses in the last few years may be unaware that their property taxes are higher than they should be. The market in many areas has changed, so the assessed value for your house may be higher than your current market value. That may be bad news when it comes to refinancing, but good news when it comes to appealing your property taxes since taxes eat away at your spendable monthly income. Here are 5 easy steps that you can take now to lower your property tax bill for next year.

Get your current assessed value. You need to know if your current assessment is higher or lower than your purchase price. You also need to look to see what your taxable value is with your assessor. Many communities offer a fixed exemption amounts from taxes on their tax bills for veterans, resident homeowners, disabled homeowners etc. Those can lower your taxable base for your property. Find out what amount your house is being taxed and assessed at by your local authority and look at the overall tax rate for your area.

Find out how much your house is worth today. You can use online sites like Zillow to start to look at your house value estimate, but one number like the Zestimate will not impress your assessor. You also need other information like the trend of the percentage of change in the median price up or down that is available on the local information pages by neighborhood, town/state or zip code. You might also consider asking a local agent for a CMA (comparative market analysis) on your house. Some agents will do it for free if you have worked with them before, others may charge a small fee for their professional time. They will have the most up to date information from the local MLS database. You can also pay for an appraisal for $300-500, but many assessors will give the same consideration to solid CMA so find out before you pay for an appraisal that you may not need for your appeal. 

Build your case with comparable sales. You can find comps online from your local recorder's office, sites like Redfin, Realtor or Zillow or get them from a helpful local agent. Zillow has a video to help you find comps on the site and an article for choosing the best comps for your house. A comparable sale for a real estate purchase is a similar house sold in a similar nearby area within the last 30-90 days. For assessment purposes, many assessors have an assessment period that often starts just before the new tax year. Call your assessor and ask what period of time you need they use for comparable sales for appeals. You need to make sure to have all the basic information on each comparable house that sold in that appeal period.

Come prepared. There are no do overs for tax appeals. Come ready to present your case with information in hand and you will be more likely to win your appeal the first time. Look for 3-6 similar sales that sold for lower than your assessed value, get copies of the local median home price trend for values since your purchase, get a basic print out of all home sales in your nearby area during the appeal period and provide a basic description of how your house compares with the houses that have sold.  A local agent can also provide you with a list of recently sold houses. You need the basic house information (bed/bath, square footage, lot size, year built, significant remodels etc.) for any comps that you use. Doing that and coming prepared gives you a good chance of winning your appeal. You need to prove that your assessed value is higher than houses that have sold recently NOT that you should be taxed at the same rate as a nearby neighbor with lower taxes. That argument rarely works with assessors while citing recent sales and focusing on current values often does.

File your tax appeal on time. If you miss the deadline to appeal, you will not be able to appeal until the following year. If prices go up in that time, you may lose your chance to appeal to a lower tax base altogether. Every municipality has different forms and different deadlines. Call your local assessor's office to get the process for appeal in your community, the necessary forms and the deadline to file your appeal. Many assessors offices now have that information available online so look up your local assessor to see what their process is or give them a call. Most assessor's offices are very helpful in providing information.

You can win your tax appeal if you come prepared. If you do not win the first time, consider appealing your denial. Many people have the information they need to reduce their taxes, but the initial assessor decision is used as a "gatekeeper" to discourage appeals. The more solid information you have, the more likely you are to win. Winning a tax appeal is satisfying and more important is means you will have more spendable money every month.

1 comment:

  1. I really appreciate your blog. I have just purchased house at $720,000, which is $40,000 higher than the Zestimate for the property. Appraiser in order to justify sales price used homes that were much larger, two story (my house is single story), with the hard wood floors (my house has only fading blue carpeting etc) that were listed, and not sold, at the time of my appraisal. I believe appraiser was influenced the the real estate broker who represented seller. In addition square footage quoted in the appraisal is higher than the number on the Assessor files. After taking possession of the house I've noticed leak under the kitchen sink and water damage which was not identified in house inspection report, the house is old (42 years) however appraiser appraised it at 20 years despite that all appliances are 30 to 42 years old. I went to Orange County (I live in California) assessors office and they told me that they will use sale price as a appraiser value. Had they use the Zillow estimate the value of the house would be $42,000 lower (currently price trend is downward). Do you think I have a chance in renegotiating appraised value?

    I really appreciate your informative blog.
    Anna Warner