After I bought my first house in the early 2000s, I appealed my property taxes based on the fact that my neighbors, with identical homes, were paying much less. My appeal was rejected. After that, I researched what it takes for a successful property tax appeal, and I was able to reduce my property tax bill of my condominium by 25%.
Basic rules of appealing property taxes
Property tax appeal rules and deadlines vary by county, however the basic premise is that a homeowner cannot complain her taxes are too high compared to a neighbor. However, she can say say 3-5 similar houses in the neighborhood recently sold for say 15% less than her property, therefore the assessment value of the property should be lower based on current market price.
Software versus professionals
According to articles in the The Wall Street Journal, there are several major websites that claim they can lower taxes including EasyTaxFix.com , Lowermysassessment.com, and Valuetaxappeal.com. In addition, I received mailings from realtors or appraisers who claimed they could reduce property taxes. The online DIY websites cost around $40-50. The experts charged either a flat fee ($500) or a percentage of savings (25-33%). A formal appraisal cost $300, and another $150 for the expert witness to appear in court. It became obvious to me that all these resources were tapping a public database (not Zillow or other non government sites) of real estate sales and property taxes and I found the website using an online search.
Comparable home sales
I had to be careful in choosing a comparable house. It had to have the same number of bedrooms, bathrooms, garage, style of home (mid rise condo vs. high rise condo, single family attached home vs detached home etc.). I made sure all the comparable homes were less than a mile away, in the same municipality, and in an equally desirable location. While it would be easy to show my home was more expensive than one in a worse neighborhood, the assessor, who was a local expert was more likely to reject such a comp.
Using a spreadsheet
Since I had recently refinanced, I referred to the formal appraisal, but I found that to be less than perfect since it was done by a national appraiser. The report however gave me tips on how to do this myself. Rather than using the online tax appeal sites, I downloaded the county's online database of recent sales in MS Excel format, limiting my search to the relevant dates, then sorting by square footage and then price. I kept homes within 50 square feet of my property. I rejected foreclosures and related party sales, which were indicated by a code. A description section indicated the type of home and number of rooms. I narrowed down my choices to five homes that were the most comparable to mine.
Adjusting for square footage
To compare my property with other properties, I had to make an adjustment that appraisers call "Gross Living Area" or GLA adjustment. For example, assume the average sales price of comparable homes is $300,000 for 1000 sq feet home, or $300/sq foot. My home's market value, based on the property tax assessment is also $300,000 but my home is only 980 square feet. This means its comparable value is $294,000.
In addition to the GLA adjustment, I noted if the comparable homes had features like fireplace or deck that I didn't have. I assigned them values based on my appraisal report ($2000-5000). My appraisal report also assigned higher value to higher floor condominiums. I made this adjustment as if comparable condominiums were on the same floor.
Hearing and settlement
With all the above adjustments, I was able to show that my home was 25% over assessed based on five recent comparable sales. I scanned the MLS listings of the comparable homes, which was easily available online, for photos. I added thumb nails to my comp sheet, giving it a professional look. I submitted my appeal in personal at City Hall before the deadline date.
I received a property tax appeal hearing date by mail. However, I received a call from my assessor before the hearing date. I was able to get my appeal approved over the phone and the municipality settled for a fair assessment for my property, which resulted in a full 25% reduction of my property taxes.
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