Thursday, June 11, 2009

As Home Values Fall, Your Property Tax Bill Probably Should Decline, Too


Why is it that so few taxpayers try to reduce their property taxes? As many as 60 percent of US homes may be overassessed, according to the National Taxpayers Union, but most homeowners don't know how the process works or that they can appeal.

You are likely to have more success this year, because in most areas there is a large disparity between assessed values from the boom years and depressed current market values.

Most likely your home's assessment is out of date since it is based on an average of local values that may go back three years. Since the height of the boom market, prices have declined by 20 to 50 percent.

Appealing your assessment is something anyone can do, yet it is important to do some preparation work. I have been able to lower or freeze my home's assessed value several times.

There's often little accountability in how assessors value your property. They make mistakes, and assessments may be wildly inconsistent in your community.

Check your home's legal description. Does it match precisely your house and lot characteristics? There may be errors in the records on the number of finished rooms, lot size, and interior square footage.

The second step is to determine whether you are fairly assessed. You will need to work out whether similar houses sold at lower prices than your home's current market value. Are there any local features that will reduce your property's value? Railroads, highways, landfills, easements, and rezonings (to commercial) count.

You can present these details to your assessor before you file a formal appeal, but don't expect him to give you a reduction. Most states have bodies that deal specifically with real-estate tax appeals at higher levels.

If you don't feel comfortable researching and filing your own appeal, you can hire an attorney. They are usually compensated by taking a percentage of your tax savings. Appeal boards tend to respect the opinion of a certified real-estate appraiser more than yours. Spend a few hundred dollars to present a recent certified appraisal.

Be professional and precisely document your case. Appeals boards are swamped right now. Ocean County, N.J., for example, is facing more than 14,000 appeals this year.

Typically, you will have just a few minutes to make your appeal. Keep in mind you have to meet strict filing deadlines. Don't expect an immediate reduction in property taxes. Taxing bodies still have the power to raise levies or float referendums if they need funds. Your taxes may rise - even in this market.

If the deadline for appeal has passed this year, start building your case for next year. Definitely mount a challenge if you are in the highest property-tax states - such as Massachusetts.

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