How to Lower the Property Taxes on Your Home

Property taxes are a fact of life when you own a home, but you shouldn’t have to pay any more than necessary. Your property taxes are based on the assessed value of your property recorded at your local government tax assessor or records office. This value is multiplied by an assessment rate and then a tax rate to determine how much you need to pay in property taxes.

According to the National Taxpayers Union, between 30 and 60 percent of properties are over-assessed. Few individuals challenge their property assessments and end up losing hundreds, if not thousands of dollars, toward unnecessarily high property taxes. Don’t expect anyone to tell you that you are paying too much, however, you need to be proactive and do the research yourself if you want to lower your property taxes.

Before you can lower your property tax bill, you need to understand how the assessed value of your property is determined. Different states and counties determine property value in a variety of ways, but the following criteria are the most commonly used.

• How much you purchased your home for if you bought it recently
• How much similar homes in your area were purchased for
• How much it would cost to replace your home
• How much you could rent your home out for
• The value of the last purchase price plus a set inflation percentage

Most municipalities reassess your home value every few years, so the value of your home on record may be different than when you first purchased it if you have owned your home for awhile.

Once the market value of your property is determined, it is multiplied by a residential assessment rate to find the assessed value. The assessed value is then multiplied by the tax rate to determine how much property tax you pay each year. For example, if your home is worth $200,000 and the residential assessment rate is 25%, the assessed value would be $50,000. If the tax rate is 6%, your property taxes would be $3000.

You can find out how much your home is valued at by paying a visit to the office of your local tax assessor and looking at your property record. Unless you purchased your home recently, the information on your property record was determined by an appraiser hired by the tax assessment office. This appraiser must evaluate thousands of homes, and so limits their inspection to a quick drive by and an examination of any building permits on file. Instead of assessing every house, the appraiser may have checked out only a few houses in your area or neighborhood and used those few to make assumptions about the rest. Inaccuracies and mistakes commonly occur that affect the value of your home, and consequently the property taxes you pay. Look through the information that is listed about your property to make sure it is correct.

If you think that the assessed value of your property is too high and you should be paying lower property taxes, you can challenge the assessment. Do some research and build a case to present to the tax assessor. The tax assessor isn’t going to lower your property taxes based on your word alone, you need to have solid evidence that your home is overvalued. The following are some of the things you could check to see if your home has been assessed incorrectly.

Property Records

If you find inaccuracies on your property record, you may have grounds to appeal for a reduction in your property taxes. Make sure that the report lists the correct square footage, acreage and number of bathrooms.

If you made renovations, such as removing a bathroom to make way for a closet or bedroom, taking down a shed or fence or cutting down several large trees, the value of your property may have been reduced.

If you or a contractor filed a building permit, the tax assessor will assume the work was completed and will raise the value accordingly. If the work was never done, or there was a major problem with it, you can use that to argue your case.

Comparable Properties

Make sure the comparable properties used to determine the value of your home are really comparable. Property information and tax assessments are public information, so you should be able to access these easily.

If the appraiser made assumptions about your entire neighborhood based on a few sample houses, your property value may not be accurate if your home is markedly different from the samples. Look at the property cards and drive by the properties used to determine your home value and make a note of any differences. Pay attention to things like house size, age, build, curb appeal, improvements, expensive landscaping, sheds, number of fireplaces, fences and proximity to undesirable things like highways and railroad tracks. Take a picture of anything that would make the comparable houses worth more than yours to use as evidence in your case.

Market Desirability

If the exterior of your home is similar to others in your neighborhood, you may be able to argue that yours should be valued lower if you have fewer or older interior improvements. Things like tile floors, granite counters and updated fixtures can increase the value of a house, and if the rest of your neighborhood has these improvements but your home does not, your house value will be lower.

You may also be able to argue that where your home is situated in the neighborhood is less desirable and so the market value of your home is lower. For example, if all of the rain water from the neighborhood drains into your yard, the view from your home is less desirable or you are located at the front of the neighborhood by a busy road instead of a cul-de-sac, the value of your home may be less than the other homes in your neighborhood. Keep in mind that you will need to have proof to support your arguments.

Overall Housing Market

If the housing market has gone south in your area, as it has in so many others, don’t expect your local government to lower the assessed value of your home in response. Investigate the sales prices of similar homes in your area to see if your property value has fallen. You can ask a realtor for a comparative market analysis to help with this step.

Things That Increase Your Home Value

Make sure you take into account anything that may make the value of your home higher as well. When you appeal to lower your property value, the tax assessor will take a close look at your home and may even send an appraiser to check it out. If you have not done your research thoroughly enough, they may find that your home is actually undervalued and you could end up paying higher property taxes.

Get Your Home Appraised

You may want to hire your own independent appraiser to find out the true value of your home. Appraisals can cost several hundred dollars, but the cost may be worth it if you are able to negotiate a lower property tax. If you recently refinanced your home, you may even have an appraisal already. Some tax assessors will not accept an outside appraisal, however, so be sure to check.

Compile all of your information together and contact your tax assessor to arrange a meeting. You will first be able to meet with the tax assessor in an informal setting. Present your evidence calmly and briefly. If the tax assessor agrees that your home is overvalued and you should pay lower property taxes, they will approve the appropriate changes.

If the tax assessor will not meet with you or doesn’t agree with your case, you can file a formal appeal. Each municipality is different, so check to find out exactly how the formal appeals process works. You should hear back within a few weeks if your appeal is successful. As a last resort, you can go to court to lower your property taxes.

Don’t wait too long before you file your appeal. You may have to file the appeal within a certain amount of time after receiving the bill to have the reduction count for the current year. Also, if you win your appeal, the property tax reduction will only be applied to future years. You won’t be refunded any property taxes you paid previously.