Home values have risen across the country, which means many homeowners' property taxes are going up, too. But if your property tax bill has increased significantly, you may have grounds for an appeal, particularly if the increase seems out of line with overall appreciation in your area.
First, look for errors that may be inflating the value of your house. You'll find a list of factors used to come up with your assessment on a property record card kept at your assessor's office. These cards typically include your property's lot number, dimensions and significant features. Search for obvious errors, such as incorrect square footage or the wrong number of bathrooms. Check your jurisdiction's Web site before trudging to the assessor's office.
Because many appraisals are done on a drive-by basis, your assessor may have overlooked defects that could lower your property value, such as a wet basement or cracked walls. If you can prove that the assessment was based on erroneous information, you may be able to get your tax bill reduced without going through the appeals process.
Check out similar properties. You don't need to interrogate your neighbors. Property tax bills are public information and are available online in many jurisdictions. Make sure, though, that you compare your home with others in your tax classification, which usually covers homes of similar size and age, says Ilyce Glink, managing editor of Equifax Finance Blog. If your assessment is considerably higher than assessments for similar homes (the more examples, the better), you have a good shot at winning an appeal.
It helps to know how your local government assesses property. Some jurisdictions base assessments on 100% of market value; others use a fractional amount, such as 60%. Don't assume you're getting a bargain if your assessment ratio is low, because it could be offset by higher rates.
Also determine how the assessor defines fair market value. Some localities base assessments on the cost of replacing your home, plus the value of the land. A certain amount is subtracted for depreciation. Others use recent sales of comparable homes in the neighborhood, and you may be able to challenge the assessment by doing your own research.
You can use real estate Web sites such as Zillow.com and Trulia.com to research sales of comparable properties. A local real estate agent may also be able to provide recent sales prices for comparable homes. Focus on prices for homes that actually sold, as opposed to listings, and look for sales that occurred within the past 60 to 90 days, says Michael Corbett, adviser to Trulia.
If the value of your 60-year-old bungalow is based on recent sales of new McMansions, you may have grounds for an appeal, says Svenja Gudell, director of economic research for Zillow. Note that the McMansions probably boosted the value of your home, even if they block your view.
Get the breaks you deserve. Also make sure the assessor credited you with all of the property tax relief available to you. Most states offer exemptions, lower tax rates or reduced assessment ratios for a variety of taxpayers, including primary homeowners, senior citizens and veterans. Check your state's department of taxation Web site.
Most jurisdictions give you 90 days after you receive a new assessment to appeal, although some close the appeals window after 30 days, says Pete Sepp, executive vice-president for the National Taxpayers Union. Some lawyers handle property tax appeals on a contingency basis, but most homeowners can appeal on their own, Sepp says. You can find more tips on how to appeal your property taxes at www.ntu.org.
- TOOL: State-by-State Guide to Taxes
- Housing Outlook, 2014: Home Prices Head Higher
- Kiplinger's Economic Outlook: Housing
- Real Estate
- property taxes