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How To Reduce Real Estate Taxes

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Now that everyone has overpaid for their homes, it’s time to learn how to combat the recurring reminder that you’ve overpaid: real estate tax time! They estimated that real estate tax collections are up like 35% the last four years and there’s little chance that those taxes will be rolled back, so the only two weapons left in your arsenal are to:

  • Contest potential errors, and,
  • Argue your case.

Unfortunately, I believe the artificial floor of your valuation is the price you paid for your home so you can never get it lower than that (it can’t possibly be worth less than what you paid for it, since you likely had a home appraiser come and value the home for a mortgage lender).

Contest potential errors

Apparently, according to the American Homeowners Association, 60% of homes are assessed too high, so this is probably your best bet in contesting the valuation of your home. Check that they have all of your information correct such as the number of bedrooms and bathrooms, finished square footage, lot size, etc.

The article also recommends checking how much your house is worth based on recent home sale prices and real property records of your neighbors. Usually homes in the same development are built similarly so if your house is valued much higher than your neighbors, it pays to check and use that to your advantage.

Argue your case
The AHA says that 70% of contesters who find an error do get it fixed and have a lower tax bill. The two ways to contest are “mechanical errors” where the assessor simply made a mistake, giving you more bedrooms than you have; and the those have the highest chances of success since you can bring something concrete to show the error. The second way to contest are on “judgement errors” where the assessor just gives you a valuation based on your neighbors property.

To contest, first go directly to the assessor and show them your evidence. Often, that’s all you’ll need to do and you’ll walk away with a lower bill. If that doesn’t work and you truly believe in your case, ask for a formal hearing.

Source: CNN Money

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5 Responses to “How To Reduce Real Estate Taxes”

  1. RealEstate Taxes Follow the Golden Rule:

    “He who has the Gold makes the Rules”

    I think we’re all just stuck paying them. You know when the tax bill arrives because all my neighbors look bummed out.

    - Bryan
    http://www.BryanCFleming.com

  2. bam says:

    “Unfortunately, I believe the artificial floor of your valuation is the price you paid for your home so you can never get it lower than that (it can’t possibly be worth less than what you paid for it, since you likely had a home appraiser come and value the home for a mortgage lender).”

    Not really. If you make the mistake of buying at the height of a bubble market or prior to some other unforeseen downturn, then you are well-advised to get re-appraised. My neighbors (and many others) did this in the early 90s when local housing prices crashed.

  3. Anonymous says:

    Yes, the value of a house can easily fall below the purchase price. Bubbles aren’t the only cause either. Massive layoffs by large local employers can do it. So can excessive meddling by local government.

  4. Anonymous2 says:

    Sure, it’s a lot more satisfying to blame the local government than to accept that you got caught up in a bubble.

  5. thc says:

    In California, real estate taxes are based on the purchase price of the home, not its appraised value, so there’s not really anything to contest. Taxes are still allowed to creep up a little bit each year and now ours have crossed the $9,000 mark. Yippee!


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