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How To Fight Your Property Tax Assessment

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One of the less often discussed effects of the subprime lending crisis and falling home values is the effect lower home values will have on property taxes. While a drop in home values is bad for a homeowner, a lower property value assessment is sort of like the silver lining. Unfortunately for homeowners, counties and states aren’t so good at lowering assessments. So, if you suspect your home has recently fallen in value, consider fighting your next assessment.

As an aside for any Maryland homeowners, you will have to apply for the Homestead credit this year if you want to stop your property taxes from shooting through the roof. The state discovered that lots of investors were getting tax breaks through the Homestead Tax Credit and have instituted a one-time application process. If you own your home and are living in it as your primary residence, they’ll approve you. With property taxes going down, they’re looking to squeeze out tax revenue from wherever they can find it. For more information, read this FAQ on the Maryland Homestead Tax Credit.

The follow seven tips come straight from Money but I can boil it down into something a little simpler.

How does your county assesses the value of homes? Two common ways are with comparables (or “comps”) and with replacement/rebuilding value (very similar to how banks appraise homes). With comparables they just look at similar houses and what they recently sold for. With replacement/rebuilding value, they “guess” based on how much they think it would cost to replace it. After you figure that out, request your assessors evidence so you can examine it for any errors. Chances are the assessor didn’t walk through every room in your house (or even enter your house) and is basing it on public records. Did he or she put the correct number of bedrooms and bathrooms? Is the square footage correct? Any discrepancies can be used to adjust the value of your home.

Build a case for a lower property assessment and do it quickly. Most places have a time limit for an appeal, Money says 60 days it the norm but I’ve seen places with 45 days and 90 days. Your case will be based on how your county assesses home value. If they use comparables, get some comparables and use them as ammunition (get 5-10, more is better).

Meet with the assessor first, then file an appeal. If you can convince the assessor that he or she assessed your home higher than he or she should have, it’ll help your case when it comes time to appear before the review board because they’ll be there. If you convince them, they’ll put up less of a fight. At the appeal board, prepare an 8-10 minute presentation with pictures of the comparables and a spreadsheet of the data. Think about what you would want to see if you were on the board. If you’ve done your homework, act professionally, then you have a good shot.

What if you lose? They recommend you move up to the state board and then to court if that fails. Money says that going to court will require a lawyer but that counties and states will often want to settle just because it’s just as expensive for them as it would be for you. They might not give up all of it, but they could give up a big piece.

Good luck!

{ 4 comments, please add your thoughts now! }

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4 Responses to “How To Fight Your Property Tax Assessment”

  1. Minimum Wage says:

    I don’t own my primary residence, why should it be taxed higher than a homeowner’s primary residence? Is it my fault I don’t own it?

  2. That One Caveman says:

    Last month, I wrote about challenging my own property tax assessment. I’ll find out next month if I was successful.

    Our entire subdivision was victim to unwarranted reassessment – I’m convinced they didn’t even drive by the houses. In a market with declining home values, there is no reason to raise an assessment by over 10% except for greed.

    Another useful tool in a challenge is an independent property assessment. If you recently purchased your house, your bank will have hired an assessor and you should have access to the copy of the assessment. Use that when challenging your assessment and you’ll likely win without complaint. My purchase was 1 1/2 years before my challenge and I’m hoping that that would be a new enough assessment.

  3. Texan says:

    I challenged my home property value for 2007 and lowered it a few thousand dollars. My mistake was using housing prices sold in 2008, not 2007. They did not accept those values. I can use those to attest my 2008 valuation.

  4. Dale says:

    While your assessment is automatically adjusted based on the purchase price when you buy your home, that doesn’t always happen. In at least some areas, if your purchase price was more than a certain percentage below the assessment, there is no automatic adjustment. That happened to us when we bought our first home. However, that is often one of the easiest cases to fight. All you need to do is show that it was an arms-length transaction or that what you paid matched the comparables.

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