Several counties have begun sending out updated property tax assessments to request declining home values. You probably received notices of increases while property values were rising. Many people don’t know that they have the right to appeal the assessed amount if they feel it’s not right. If you’re successful, you could save thousands of dollars, but there are risks, too.

How Property Tax Reassessment Works
It partially depends on your state, but basically, your county assessor annually reviews property values and either increases or decreases property taxes based on estimated current value. However, this is done by a formula, not by a personal review unless you’ve requested a reassessment, bought a new home, refinanced a mortgage, or made permitted home improvements that prompted a reassessment (for increased square footage.)

When you receive your notice, it will indicate the current assessed value, the tax, and a due date. The notice should also indicate a deadline to appeal your assessment.

Reasons for Appeal
You can appeal your assessment if you feel it overvalues your home, but not simply because you can’t afford to pay the tax. Some reasons why your home may be overvalued:

  1. Local sale prices have significantly decreased in your neighborhood
  2. Your home is not upgraded
  3. The listed square footage is wrong
  4. Changes to the neighborhood have depressed the value.

How to Appeal
Find the forms. The notice should provide instructions for appeal. If not, visit your county assessor’s website to download the proper forms. If you miss the deadline for appeal, your property tax won’t be adjusted in time to reduce your payments this year, but you may receive a refund later.

Build Your Case.
When requesting the appeal, state your case clearly. For example, if the square footage is wrong, indicate that. It’s possible that the assessor saw your enclosed porch and assumed it was fully finished. They may be working off a set of plans for your neighborhood that your home deviates from. It’s very common for older homes to be recorded with an incorrect number of bedrooms, bathrooms, or square footage.

You will also need to find comps for your home. Check the MLS for recently sold homes with the same square footage, number of bedrooms, and number of bathrooms. If you live in a recently built subdivision, it should be easy to find homes like yours. It’s more difficult in older neighborhoods, but it can be done. Look for the comps with lower values than yours to prove your case. If all the comps are higher, then you run the risk of having your taxable value increased instead.

Finally, consider any changes to your neighborhood that could negatively impact your resale value. For example, new train tracks, a freeway expansion, or a new high-traffic development could be cause to reduce your value, even if they don’t actually bother you.

Schedule the hearing. Some counties require you to visit the assessor’s office for a formal hearing. Others will send an assessor to you. Some will even handle the whole thing by mail. If your county’s process is very complicated, or notorious for refusing appeals, consider hiring a real estate appraiser or lawyer to make your case for you.

Watch Out for Scams
Property tax reassessment scams have been around for decades, but they’re becoming more prevalent as property values decline. If you receive a notice about your property value, review it carefully. Watch out for the following red flags:

It’s not an official document from the county assessor’s office. Scammers will send official-looking documents that reference “tax adjusters” or “tax review.” Check the address on the document. It should match that of your county assessor’s office, not a PO Box or business address.

The reassessment requires a fee. There is no cost to have your property reassessed by the county, so you shouldn’t pay a dime unless you hire a private appraiser or property tax lawyer to plead your case.

Most of these aren’t true scams in the sense that they’re trying to steal your tax payment. In most cases, they just want to be paid for doing something you could do for free.

Risks of Reassessment
There is always a risk to being reassessed. Your tax bill could go up, especially if you’ve done extensive remodeling without being reassessed or your home has been incorrectly recorded and is larger than stated.

Property tax values rise and fall every year. If your tax is reduced this year, and property values start to rise again next year, your bill will go up, but at least you’ll have save some money this year.

Comments

One Response to “How to Request a Property Tax Reassessment”

  1. Festival of Frugality: “The Baseball Edition” | Personal Finance Analyst on June 9th, 2009 2:15 pm

    [...] gets the critical double-play groundball with posts like How to Request a Property Tax Reassessment posted at Sound Money [...]

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