Challenge Your Property Taxes and Win!

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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…

county-taxes.pngLast 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!

Related: More ways to save a ton of money.

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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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Mrs. Micah says

    All good stuff. The building I work for actually has an item in the budget to have lawyers go over our property tax assessment and challenge it if it’s over what the company thinks it is. And this year, they won back thousands.

  2. Ryan says

    Good point, Mrs. Micah. Using a lawyer is also an option for a personal situation, but you have to be careful that you don’t spend more for the lawyer than the amount you save on taxes! 😉

  3. Art Dinkin says

    Are you at all concerned that you just successfully won the arguement that your home is not worth nearly as much as the government thinks? Could this come back to haunt you if you sell you house?

  4. Ryan says

    Art, great question! No, I am not concerned that I convinced the government that my house is worth less than the government thinks.

    My house was incorrectly listed as having one more bedroom and several hundred more square feet than it actually has. The appraisal was over $30,000 more than it should have been. When it was reappraised it was actually brought equal to fair market value.

    This saved us about $700 per year for two years when it will be reassessed again. We will not sell the house between now and then so in my opinion, that is money I should not have to pay, and it is money I can have working for me now in some other investment.

    I do get the point of your question, and I think it is an excellent point!

  5. Art Dinkin says

    I see your point too Ryan and think you made the right choice.

    I asked these questions because I think we sometimes tend to get too short-sighted. All we want is lower property taxes now… until we try to sell our house and then think our house is worth a lot more than the realtor’s opinion.

    I have never had a huge increase in my property taxes. In fact I celebrated the tax bill when the assessment was finally more than I had paid for the house! I think it took 3 or 4 years before that happened. 🙂

    Great blog Ryan. You have a new reader.

  6. Four Pillars says

    I thought property taxes changes would be a function of how much your house value has changed relative to the average house in the tax-paying area? Ie if your house value went down the average amount then your tax change would be the same as everyone else’s?

  7. Miranda says

    We’ve noticed a decline in our property taxes as well. You are right, though, that it is a good idea to double check. Errors like those on your home (extra bedroom, etc.) are more common than you might think. As always, with finance matters, you have to be vigilant about your interests — no one else will be.

  8. Steve says

    This is great information. I just bought a new condo so my property value is pretty accurate right now. Plus my area isn’t taking a major hit like some of the others. I will remember this info for the future.

  9. Tabby says

    I find most of our taxation systems (property included) to be in need of a major performance overhaul..

    Good for you on getting some savings though.

  10. Jarhead says

    I recently read that counties will soon be raising tax rates due to the fact that they budgeted based on increasing property values. So even if it does go down don’t be surprised if it goes back up in the near future. Seems counties counted their chickens before the eggs hatched.

  11. owain says

    I hate taxes. Haha. There are so many ways in which we can benefit from the economic hell we are in right now but only if you are on the right side of the fence. House prices needed to come down at some point as they were getting way out of control. In a few years though they are going to keep going up again. I guess the demand for housing will only grow over the next 20 years and sadly that will mean higher prices. Global population growth will be the death of us all eventually.

  12. Carla says

    Property tax collections in some areas used primarily to fund education and other services. Lower property taxes doesn’t serve everyone well.

  13. Ryan says

    Carla: I agree. But I also don’t like to pay more money than is necessary. For instance, when I challenged my property tax assessment, my house was listed with the county as having an extra bedroom and more square footage than it had. I don’t believe it necessary for me to continue paying additional money when I am not required to.

    Beyond that, I certainly can’t fault someone else for challenging their property taxes when housing prices drop. There are many people who will save thousands of dollars because of this. I think that is a good thing, especially if it means they can pay off debt or continue to afford living in their house instead of selling it or facing foreclosure.

  14. Tom says

    When I owned a condo and values went down, my property taxes rarely went down.
    They just changed the factor by which they calculated them.
    But, property taxes here in Vancouver are relatively cheap.

  15. Ryan says

    Very true, Tom. The variable can change. But in some places a vote is required for the taxes to change, and many people may not be willing to vote for that.

  16. Imani says

    Another great post.

    This is something (challenging my property tax assessment) on my list of to do’s this spring. The flag for me was when I called my home insurer a couple of weeks ago to discuss coverage and they showed my home as a two-family, which it is surely not. So maybe something is not right.

    Anyway, I did get a reduction of almost $400 on my insurance. So that is good. More money for ING :-).

  17. John Hunter says

    Reducing the tax due to a reduction in your specific assessment is a wise move (if you house is worth less than the assessment).

    Some people though think that the total tax bill inevitably increases when house values, for the whole market increase. I think we let the politicians off if we say property taxes are determined by the market. When housing prices increased by 20% if the taxes went up by 20% that was a choice of the politicians to raise taxes. The tax rate on property taxes is adjustable and where I am aware of anyway the politicians adjust it annually.

    If your home appraisal falls by 10%, your taxes only fall if the tax rate is not increased by over 10%. In most cases this is true (increasing tax rates to make up for declines in home values is usually limited). However, if we fall into thinking our taxes are set by our home appraisal we fail to hold accountable those that truly decide our taxes, the politicians we elect.

  18. Ryan says

    Very true. In our county, home values are reassessed every three years, though the real estate tax rate can change whenever it is voted upon. A lot can happen during that time, which is why I challenged my assessment.

  19. Live Money Smart says

    Good article, and definitely something many people should look into doing.

    Sadly though, because of falling tax revenue in many areas, what Curious Cat suggests might happen is very real. In many areas property tax rates will increase to keep counties and states from losing too much tax revenue. Unfortunately the politicians will refuse to make do with less.

    If this happens in your area, it is just another great reason to challenge and reduce your home’s property tax assessment in preparation of higher property tax rates.

  20. Kevin says

    I recommend that , depending on how your county does its reappraisal, everyone should review their property card once a year. Here I recommend a homeowner to do it every August. The county has done all of the new construction input into the system and errors can be made to the wrong properties. The way the government sees it, it is the homeowner/property owners responsibility to make sure (manage) what is correct on their taxing card. They want things to be correct but sometimes errors do arise. (The homeowner wasn’t there to verify changes or where their boundries are.) With GIS today, it helps them but they are appraisers, not surveyors.
    I recommend that if something is wrong, call the assessors office and ask questions on how to get things corrected. They will be helpful, usually. Remember, they have bad apples there also. I know some that will not do things, even if it is wrong and need correcting. Always move up the ladder, to the Assessor if you need to. You elected them.

  21. Jody says

    My mortgage payment recently increased by over $400 per month after two years in our new home. Talk about getting priced out of your house. Though my wife and I had rather not, we can currently afford this increase, but what a bunch of crap. We were told by Countrywide that our property taxes had been incorrectly calculated which ultimately resulted in a negative balance in escrow. In this board’s opinion is this amount considered a little outrageous or are we just supposed to take such a huge increase each month in stride? Help.

  22. Ryan says

    Jody: I had my mortgage payment increase once as well for the same reason – the estimated property taxes weren’t enough to cover the bill and the escrow account needed replenished. Rather than charge you the difference all at once, the escrow company probably added the amount needed to bring your escrow account current to your monthly mortgage payment. They also had to add more to your mortgage bill to bring up the monthly difference between the amount you were paying and the amount you will owe for next year’s property taxes.

    That means this year your payments are a lot higher than what you were expecting, but they may actually drop next year because you aren’t adding money to make up for the low amount in your escrow account.

    You can read more about it here: https://cashmoneylife.com/mortgage-payments-adjust-change/

  23. Ngoc Chim says

    Hi Ryan,
    I am inspired by your article. I live in Santa Clara County in California and my home was assessed to high. I did submit a proposition 8 review to try to reduce the assessed value of my home. Sadly it was denied. My mistake was not submitting an appeal. I was really upset when I realized that my next door neightbor was paying $1,500 less in property tax. Their house had much more square footage, they purchased the property after mine. Due to tax laws, nothing can be done at this time. I will have to wait for next July to resubmit my proposition 8 review and the appeal. I do agree that all property owners should verify the assessed value of their homes every year. Thanks for all the great tips.

  24. Eric Garrison says

    Hi Ryan,

    The same thing happened to us. We got a higher payment this year.

    Can you challenge the county every year? If so, what are the best steps to address it?

    • Ryan says

      Eric, each county has different rules regarding how often you can challenge, and the process for challenging. You will need to contact your county auditor’s office for more information. Best of luck!

      • Stephanie Cartigiano says

        Barnegat has five Adult Communities – and, I believe, we are being over-taxed…Six months ago when people started appealing we did not because we were comfortable with our taxes – then they were raised in May almost $400 – now they went up $600 a quarter (we are seniors and do not get raises ) and are very concerned about the new Health Care law and how it will affect Medicare and future coverage and services and then the raise in our real estate taxes. How should I proceed because we cannot afford this tax hike.

        • Ryan says

          Stephanie, You will need to contact your county about how to undertake the appeals process. Be sure to get information to support your claim, including recent sale prices for homes in your neighborhood. You may be able to appeal simply by filling out a form and submitting it to the county auditor or you may need to undergo a formal appeals process. Best of luck.

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