How to Dispute Property Tax Assessments and Save Money

A Step-by-Step Guide to Lowering Your Property Taxes

Have you ever opened your property tax bill and felt shocked? If so, you're not alone. Many homeowners believe their property tax assessments are unfairly high, resulting in unnecessary expenses. This guide will show you how to dispute your property tax assessment and save money effectively.

Why It Matters

Understanding and potentially disputing your property tax assessment can lead to significant savings. Property taxes account for a substantial portion of annual homeowner expenses. In 2021, state and local governments in the United States collected about $630.21 billion via property taxes, according to the U.S. Census Bureau. Reducing your tax assessment by even a small percentage can lead to considerable savings over time.

Millions of homeowners have no idea they can lower their property taxes. Despite possible savings of thousands of dollars, only 2% of homeowners appeal their assessments, which is the first step in lowering taxes. Shockingly, according to the National Taxpayers Union, 60% of properties are overvalued by assessors.

Step-by-Step Guide

Step 1: Understand Your Property Tax Assessment

Your property tax assessment is based on the appraised value of your property. This value is determined by local assessors who consider factors like the size of your home, the land it's on, and the value of comparable properties in your area. If your assessment shows a sale or lien you don't recognize, it may be an error worth disputing.

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Step 2: Gather Evidence

To dispute your assessment, you need evidence to support your claim. Collect data on recent sales of similar properties in your neighborhood, your property's current market value, and any inaccuracies in your assessment report. Ensure all the information, such as square footage and the number of bedrooms and bathrooms, is correct.

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Step 3: File a Formal Appeal

Each locality has its process for filing an appeal. Typically, this involves submitting a form to your local tax assessor's office along with your evidence. Be mindful of deadlines; appeals are often only accepted within a specific window after you receive your assessment.

Step 4: Prepare for the Hearing

If your appeal proceeds to a hearing, be prepared to present your case clearly and concisely. Highlight the evidence supporting your overvaluation claim, and be ready to answer any questions from the review board.

Step 5: Follow Up

After the hearing, follow up with the assessor's office to ensure your assessment is adjusted correctly. If your appeal is successful, the adjustment will be reflected in your next tax bill. 

Why You Should Look Twice at Your Property Assessment

Your home's fair market value is important for several reasons. First, it helps determine the assessed value used to calculate your property taxes. It also helps determine how much you could make on your property if you decide to sell. If you plan to stay in your home, you want your property to appraise for less. This will lower your property tax bill.

Home prices rose at a rapid pace in 2021. The typical home gained $50,000 in value, according to NPR. With home prices rising, there is a chance your property taxes could increase as well. However, the National Taxpayers Union Foundation estimates that between 30 and 60 percent of taxable property in the United States is over-assessed. This means people are paying higher-than-necessary taxes on their homes.

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Disputing Your Property Tax Assessment Can Save You Money

When applying for a home loan, you are generally concentrating on the principal and interest charges that will make up your future mortgage payment. However, another cost may be more complicated to determine at the outset of your loan: your property taxes.

Local governments require homeowners to pay a fee on their properties to help pay for expenses like emergency services, schools, and infrastructure. Property taxes typically make up the bulk of local government income.

How Are They Assessed?

Each year, a local appraiser or assessor evaluates the value of each property based on its fair market value. They determine that number based on the condition of the property and comparisons of the sale prices of similar homes in the neighborhood. Once the assessor has a fair market value, that number is multiplied by the local property tax rate.

For example, if your home is valued at $300,000 and your local assessment rate is 0.85%, your yearly property taxes would be $2,550. Property tax rates vary widely from state to state and region to region.

How Do They Affect Your Mortgage?

Most localities generally break up your property tax into two bi-annual payments. It is very common for homeowners to pay property taxes through their mortgage escrow account. The escrow company receives the tax bills and divides that cost up equally over 12 months. They add that amount to the monthly mortgage principal and interest charges to come up with the total monthly mortgage payment. If your property taxes increase, your monthly mortgage will jump accordingly.

Preparation Tips

• Comparable Home Prices: Gather selling prices for recently sold comparable homes.
• Photos and Repair Estimates: Collect photos of your property and estimates for necessary repairs or upgrades.
• Past Assessments: Have records of your home's past property assessments handy.

Remember, you're trying to convince the county board that your home should be valued at less than what they've assessed. You have the burden of proof. Show them why the estimated value of your home is too high.

Conclusion

Understanding and disputing your property tax assessment can save you significant money. By following these steps and using the right resources, you can ensure your property is fairly assessed.

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By taking action, you can potentially reduce your property taxes and keep more money in your pocket. Don't let an inaccurate assessment go unchallenged—review your property tax assessment regularly and dispute it if necessary.

Frequently Asked Questions (FAQ)

1. What is a property tax assessment?

A property tax assessment is an estimate of the value of your property as determined by a local assessor. This value is used to calculate your annual property tax bill.

2. How can I tell if my property tax assessment is too high?

Compare your assessed value to the recent sale prices of similar homes in your area. If your home's assessed value is significantly higher, it might be over-assessed.

3. What evidence do I need to dispute my property tax assessment?

You will need evidence such as recent sales data of similar properties, your property's current market value, and any inaccuracies in the assessor's report.

4. How do I file an appeal for my property tax assessment?

Check your local tax assessor's office for the specific process, which usually involves submitting a form and supporting evidence within a certain timeframe after receiving your assessment.

5. What happens if my appeal is successful?

If your appeal is successful, your property tax assessment will be adjusted, and the change will be reflected in your next tax bill, potentially lowering your taxes.

6. How often should I review my property tax assessment?

It's a good practice to review your property tax assessment annually to ensure it accurately reflects the current market value of your property.

7. Can I dispute my property tax assessment without a lawyer?

Yes, you can dispute your property tax assessment on your own. However, if the process seems complex or if you need additional support, you may choose to hire a professional.

8. What if my property tax appeal is denied?

If your appeal is denied, you may have the option to escalate the matter to a higher board or court, depending on your locality's regulations.

9. How long does the property tax appeal process take?

The duration of the appeal process can vary widely depending on your locality and the complexity of your case. It can take anywhere from a few weeks to several months.

10. Are there any costs associated with disputing my property tax assessment?

While filing an appeal is generally free, there may be costs associated with gathering evidence, such as appraisal fees or hiring a professional to assist with your case.