Fighting Property Tax Assessments

These days, it's not unusual for personal and commercial property taxes to rise steeply. In many areas, real estate prices are soaring at the same time that local governments are seeking more money for schools, law enforcement, fire protection and other needs. But while some increase in your property tax assessment might be expected, take a close look. Your tax bill may have increased too much.

calculating property taxes

What is Your Property's Assessed Value?

In assessing the value of a property, assessors generally look at the size of the structure, its condition, the land it sits on, renovations, and recent sales prices in the neighborhood. On a periodic basis, assessors conduct re-evaluations. In some areas, only a fraction of a home's assessed value is taxed while in others, the full value is used.

If you disagree with the value of your property, here are a few items to check:

Don't assume that any errors you might find are new. The former owner may have been overpaying as well. Just because your rates are unchanged from previous years doesn't mean they are right.

Commercial Property

When making comparisons of business and industrial property, there are some other considerations:

How to Appeal

Different jurisdictions have different systems for tax assessments and appeals. If you think you have a legitimate claim, you should act quickly since many municipalities require challenges to be made within a short period of time after an assessment is sent out. You can generally pursue tax relief in one of two ways:

  1. Negotiation - The most common remedy is to ask for a negotiation with your local tax authority. Be sure you have documentation for your claims, such as photographs, comparable sales lists, and property records that show discrepancies.
  2. Appeals or protests -  Many, but not all, states hear property tax appeals or protests based on a comparative analysis. A successful appeal can lower your current and future taxes significantly. You may also be able to appeal past property tax bills and get refunds.

As a last resort, if you have substantial proof of an incorrect property valuation but are unable to succeed through negotiation or appeals and there is a large amount of money at stake, you may want to take your case to court.

Your CPA or attorney may be able to assist you in proving the true valuation of your property and handling the appeal. Many firms offer services to review property tax bills for mistakes and comparatively analyze properties with similar homes or businesses in the area.

Play it smart: You might have a good case and an excellent chance of successfully lowering your tax bill. But unless otherwise advised in writing by the taxing authority, be sure to pay your taxes on time as assessed, rather than risk penalties and interest for non-payment.

Appeals on the Rise

Studies show that 30 to 60 percent of all residential properties nationwide are over-assessed yet traditionally, less than five percent of assessments are appealed. Of those appealed, the majority result in a reduction of taxes.

However, tax assessors report that the number of people filing appeals is beginning to increase significantly in some areas and the trend is likely to continue as home prices and property taxes reach new heights.

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