10 Simple Steps to Curbing High Property Taxes

10 Simple Steps to Curbing High Property Taxes

This post originally appeared on Trulia.

Income taxes aren’t the only taxes raising eyebrows this time of year. Property tax bills are also hitting mailboxes across the country. And as is the case with most tax bills, the amounts due are giving some homeowners fits: while real estate prices remain relatively flat in most markets, many local tax bills are on their way up.

While it’s easy to simply pay up and grumble, you might see a significant tax reduction by taking some simple steps to review —and potentially appeal —your property taxes.

1. Take a closer look at your bill

While the amount due is what usually gets your attention, that’s not necessarily the most important number on your bill. Pay attention to the rate of taxation and the assessed value (which may be determined by a formula). These are the numbers that determine your total tax bill. Double (even triple)-check to make sure they are correct.

2. Confirm that your assessment is up to date

Tax assessments don’t necessarily keep up with market value. In some cases, assessments may be updated only every few years. If property values have dipped significantly in your area and assessments haven’t changed, you may want to request a reassessment.

3. Check for errors

Criteria for assessments vary according to locality but are generally tied to fair market value. That fair market value is based not on a walk-through of your home, as a real estate professional might do, but on a list of attributes plugged into an automated valuation formula.

Make sure that information is correct for your property: you can ask your local assessor’s office for a detailed checklist if it’s not readily available. Details that you’ll want to check would include square footage (for both your house and your land) as well as the number of rooms and outbuildings, like a garage or in-law suite. You’ll also want to check the kind of property (commercial, residential, or mixed).

4. Find out how your local government assesses property

Understanding how assessments work in your area is key. This includes not only how often assessments are performed but also how values are determined. Some properties are assessed based on recent sales, while others may be assessed based on replacement value. Understand what the process for valuation is so that you can make your argument accordingly.

5. Compare similar properties

It’s helpful to investigate the assessed value of similar properties. This is easily accomplished by checking local records and sales on the Web. Look for patterns and talk to your neighbors. If you find that your assessed value is considerably higher than that of at least three to five comparable homes in your area, an appeal might make sense.

6. Check eligible exemptions or credits

As you do your research, be sure to check out whether you might qualify for a homestead exemption or other tax credit. These tax preferences might lower your tax bill — even if your assessment accurately valued your home.

7. Look for available freezes and discounts

Even if your home isn’t eligible for an exemption or credit based on its value, you may be eligible for a tax break. Many localities offer property tax freezes or discounts for seniors, veterans, and disabled individuals, no matter the value of your home.

8. Consider an appeal

If, after doing your homework, you think a lower assessed value is in order, consider requesting a reassessment. Generally, the rules for doing so, including the filing deadline and the specific procedures, are included with your assessment letter; alternatively, consult with the assessor’s website.

In most cases, you’ll present your argument for a lower assessed value, such as comparable properties, for review by letter or online and a review board will determine whether a reassessment is appropriate.

9. Don’t ignore the pros

If you’re not sure your evidence is sufficient, or if you don’t know how to best make your argument, consider hiring a tax or real estate professional with expertise in the subject. While the fee might take a bite out of any tax savings initially, a lower assessment should stick with you for a few years, which might make the expense cost effective.

10. Appeal your appeal

If at first you don’t succeed, consider trying again next year. Alternatively, if you want to escalate the matter, you can appeal a denial to the next level, usually a state board or court. Keep in mind that in addition to your precious time, appeals may require fees or court costs.

If you ask for a reassessment, remember that you must still pay your property taxes while any action is pending: you don’t get a free pass on your taxes during an appeal.

However, if you win, you will receive a refund for any overpayment.

One final word: while a request for a reassessment could result in a better result, there’s also the possibility (though statistically less likely) that you could be charged with a higher assessment. So don’t skip ahead to step #8 without doing your homework first!

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