Dunnan on Dollars

  Personal Finance Tips from Nancy Dunnan

Property Taxes
Fighting Back

May 9, 2008 - Ben Franklin said that "nothing is more inevitable than death and taxes." True. You can't avoid them but you can try to reduce them - even property taxes.

The property tax appeal process varies from locality to locality. Some allow homeowners to file their appeal via the mail whereas others require that you make an in-person appearance before a formal appeals board or committee.

How To Appeal

Appealing involves a number of step. Read through them and then decide if you want to do it on your own or hire an expert.

Step 1. Your first step is to find out the deadline for filing an appeal. Simply call your local assessor's office. The deadline typically is 30 to 120 days after the assessments are mailed out. This date is important. If you are even one day late, you will have to present your case the following year.

While you have the assessor's office on the phone, ask what the required appeals procedure is for your jurisdiction and that copies of any documents explaining the procedure as well as forms that must be filled out be mailed to you.

Handling Small Mistakes

Step 2. Next, check your official assessment for common errors. This requires a trip to the assessor's office so you can read your property record card. You have a legal right to examine this document which contains all the information the assessor used to value your property. It includes a description of your house and grounds, the assessed value and the formula used to arrive at that value.

Note: The value that an assessor gives a house is based on the market value of the property or a fraction of that value as determined by law. You'll need to know which system your town uses.

Depending upon local rules, you may or may not be able to photocopy your property card, so be prepared to write down the information by hand.  Among the mistakes to look for:

o Typographical errors. The assessment on the worksheet should match the assessment on your tax bill.

o Incorrect measurements & descriptions. Square footage and other dimensions should be accurate. For example, your lot may measure 90 by 200 but could be noted on your card as 190 by 200. Your pool, listed as active, was actually filled in several years ago. Your attic is not fully finished, only partially so.

o Inaccurate numbers. Review how many bedrooms and bathrooms are listed as well as the total number of rooms. Are you down as having four bedrooms when you really have only three? Or, two full baths when one is just a half-bath?

o Age and style. Is the year your house built correct? Are you being taxed for a two-story house when you have only one-story?

Make a detailed list of any mistakes. Then...

Step 3. Evaluate any important area changes since your last assessment.  Certain events decrease a home's value. Note such negatives as a major highway that's been put in near your property, recent encroachment of business zoning, a road expansion, a widened bridge, an addition to a school. Document these with newspaper articles that discuss the change and with photographs. (When photocopying newspaper articles, be sure the date of the publication is included.)

Next...

Step 4. Ask for an informal meeting with the assessor. 

Explain the mistakes in a clear, orderly fashion. If you have a recent appraisal of your property that reflects the accurate footage, the right number of rooms, etc., present a copy to the assessor.

In most cases, these fairly simple, obvious errors can be fixed based on your word or after a quick visit to your property by someone from the assessor's office. They rarely require a formal hearing.

After the informal meeting, type up a summary of your findings and mail a copy to the assessor, keeping one for your files. You should receive a corrected assessment within a matter of weeks.

A More Complicated Appeal

To challenge an assessment (beyond the clerical type errors covered above) you must be able to show that comparable homes in your neighborhood are assessed for less than yours.

Step 5. Identify lower assessed comparable properties. Begin by driving around your neighborhood, searching for houses like yours in terms of size, style or design, age, construction, condition and general location. Jot down the following details for of a minimum of three, preferably six comparables. For example:

          Comparable House #1. A wood and brick 3-bedroom, 2-bathroom   1968 Colonial, attached 2-car garage, central air conditioning, 1      fireplace,  paved driveway, finished basement, attached deck, small        swimming pool, wooded corner lot. Address: 65 Elm Street.

Then take photos of these comparable houses -- visuals not only will make your presentation more professional but will also add credibility to your case.

Step 6. Return to the assessor's office. Ask for a copy of the property cards for the comparable houses on your list. Add the assessed evaluations, square footage and lot size for each house to your worksheets.

If you find this research project too time consuming or you lack the patience to do a thorough job, skip Steps 5 and 6 and jump ahead to Step 7.

Step 7. Call an area real estate broker. Explain your mission. Most brokers, (for free, hoping you will list your house with them) or a small fee, will go through their listings and tell you what comparable houses have sold for and what price yours is likely to bring. Get data, including photos, on three that have sold within the last six months and three that are currently on the market.

Keep in mind that whether you or a broker undertake this research, your aim is to gather data on comparable houses with lower assessed values than yours. You want to prove that the value of your property is lower than the value shown on your property card.

You will also need to adjust for the difference between your house and the comparables. For example, if two houses are similar in size and condition, but one has a swimming pool, that asset must be entered into the equation.

If it turns out that the difference between the market value of your home and the assessment is a matter of several thousand dollars, put the matter to rest. Boards do not want to spend time dealing with small amounts. Your assessor should tell you at what point appeals are heard. Many will not consider a challenge unless the alleged over assessment is 10% or more.

If the data does not support an appeal, try again next year.

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How To Invest $50 To $5,000: The Small Investor's Step By Step Plan for Low-Risk, High-Value Investing