Last summer I successfully challenged my property tax assessment and won! The process was very simple, and is something everyone should look into doing if they own property. The result can possibly save you hundreds of dollars!

This was my situation: My wife and I finished our basement last year. When we hired the contractors to do the electrical and plumbing work, we filed for a permit with the county to keep everything legal. After the work passed inspection we received a copy of our new property tax assessment with the full cost of the basement remodeling added to our home’s assessed value. That was to be expected, but I was shocked to see how high the county assessed our home. The county valued our house at more than $30,000 above the cost of the home improvement and the amount the house was purchased for the year before!

We looked into the matter further and our house was listed as having more square footage and 1 more bedroom than it has. Based on the assessed value, what we thought our house was worth, and how much our neighbors houses were assessed for, we decided to challenge our taxes. In the end, we won our challenge, and saved almost $60 per month, or about $700 per year! You can read more about our tax challenge here.

Here is a general guide for how to appeal your property taxes:

Know your home’s market value. The housing market in the US has changed drastically the last few years. After record growth in many markets throughout the US, many of those same markets have softened or even diminished in value. This can be especially problematic if your area only reassesses property values every two or three years and you got hit at the top of the bubble. If you are considering an appeal, you should know what your house is worth in relation to your tax assessment.

Verify your home’s information on record. Our house was listed as having an additional bedroom and being several hundred square feet larger than it actually is. You will want to ensure all the information the county has for your house is accurate. Most counties have a website where this information is readily available. If the information is inaccurate, you could have a case for reassessment.

Research neighboring properties. You need to know whether your house is appraised fairly or not. Most counties have web sites that provide property information including purchase price, property taxes, number of bedrooms, square footage, home improvements, total land, and other information concerning the property. Use this information concerning your house and your neighbors’ houses as the first step toward deciding if you have a case or not.

Save Our Home laws. Some states have laws that limit the amount that property taxes can be raised for someone who already owns their house, and the taxes are not brought up to market value until the house is sold. These laws are designed to keep people from being priced out of their home because they cannot afford the continual increases in property taxes.

For example, your neighbors bought their house 20 years ago for $100,000. The house is now worth $250,000, but their property tax increases were limited to a 3% increase per year. In effect, they are paying taxes at a lower level than a $250,000 house. If you buy a comparable house next to theirs, the tax value of the house you buy will be “reset” to the current market value, and you will be assessed for the full $250,000 at the time you buy it. But once you are in, your property tax increases will also be capped at 3%. It is tough to compare tax rates in these states because you can have 2 houses with the same market value with property tax rates of $2,000 and $5,000.

To challenge or not to challenge? If there is a difference between the market value and the assessment value of your home, you need to decide whether or not you want to challenge your taxes. If the difference is only a few thousand dollars, it may not be worth the hassle. However, if the difference is large, it is almost always worth the effort of challenging your taxes. You should be able to determine how much the difference in your tax bill would be by contacting the county auditor’s office.

Keep in mind that sometimes your house may be assessed at less than market value. There may be reasons for this - you may live in a county that does this purposely to give all tax payers a break, or your taxes may not have been adjusted recently. If it is the latter, be prepared for a tax hike the next time taxes are reassessed!

Challenge your taxes. If you decide to proceed, contact your county auditor’s office for instructions. Some counties will do a reassessment based on a telephone or e-mail request, but others require a formal appeal. This usually involves filling out a special form, and sometimes appealing before a board. These actions should increase you chances of a successful property tax challenge:

• Research and gather information. Determine the market value for your house and the tax assessment value. You should also gather information on your neighbors’ houses to determine if you are paying a similar level.
• Be organized. Now that you have your data, organize it. Many counties limit you to one challenge per tax cycle (unless there are major changes to your property), so take the time to do this correctly.
• Present your case. Highlight any errors in the country records, discrepancies between the market value and assessed value, or the value of your house and your neighbors’ houses.
• Be nice. You are appealing your taxes to people who have the power to grant your request for lower taxes, or stick you with higher taxes for the duration of the assessment cycle, which may last a few more years. Remember, the county auditors and tax assessors are probably dealing with many people in a similar situation to yours. Being nice will not only leave a favorable impression with them, it is the right thing to do.

These steps will not guarantee you success when challenging your property tax assessment, but following them will increase your chances of getting your request approved. Good luck, and I hope you win your challenge!

photo credit: ctoocheck.

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