How to Contest Property Taxes
Property taxes are an inevitable part of home ownership. However, property taxes can be contested and a reassessment performed that can reduce tax outlay, leaving more money in homeowner pockets. Here are a few items to note before proceeding.
What is Property Tax?
Local governments derive a significant source of revenue from property taxes. An individual property tax bill is based on the valuation of the property, the area property tax rate, and any applicable exemptions. Property taxes pay for public services, such as public schools, libraries, sanitation, police and fire protection. Homeowners must continue to pay these bills or risk additional interest, penalties or the loss of the home.
Who Can Homeowners Turn to for Relief?
Homeowners can reach out to the local tax authority to formally request a reassessment. A local realtor or CMA can help with additional steps necessary in the reassessment process.
What Ways are Available to Homeowners?
Homeowners can do some preliminary homework to demonstrate grounds for a reassessment. It is necessary to demonstrate that the home is valued below its current assessed value. Start with:
1. A call to a trusted real estate agent to check on property values for comparable homes in the area. As homeowners prepare their case, homeowners or the realtor can find 3 to 5 similar homes that have sold recently. Check the assessments in the public database of the local government. If assessments are lower, challenge that the property’s assessment is too high. If assessments are similar but the properties are in better condition or have recent additions, it may be argued on the basis of equity.
2. A real consideration as to whether or not the process is worth the time. Challenge any new assessment letter within 30 days and be ready for a process that can take months. Check on the data listed as part of the home. A difference in lot size or bathrooms can offer an easy way to contest the property.
3. A preparation of materials and a call the local assessor’s office. Many will speak informally over the phone but some homeowners choose to go through with a formal review. In that case, request a formal review, fill out related forms, follow instructions and pay attention to deadlines. In general, these reviews do not require homeowners to appear in person and may take up to three months. Homeowners will receive the decision in writing. An appeal to an independent board is available if the review does not meet expectations.
4. A review to see if a property tax exemption may be applied. Exemptions are offered based on age, military service, disability, and more.
Some states, like California’s Proposition 13, have had recent legislation that places caps on the average property tax. California dropped from 3% of assessed value with unlimited annual increases to 1% of assessed value with an annual tax increase cap of 2%. Homeowners should be realistic as the assessed value is only one part of the equation and the property tax rate cannot be negotiated. A quick review of any recent state legislation, valuations of similar properties, documentation on the house, and applicable exemptions will enable homeowners to decide if contesting is a suitable option.
Contact Mona Koussa to get your home value evaluation (CMA)