Property tax reduction has become a big concern for Americans worldwide because taxes are rising across the United States of America despite the steepest drop in home values since the Great Depression.
Recently home values have dropped almost 20%. Still, at the same time, property tax collections across the United States have gone up a little over 3%, according to the United States Bureau of Economic Analysis.
Our governments, both state and local, collect more than 400 billion dollars in property taxes annually. It’s the highest it’s ever been. One of the main reasons is that most states prevent big tax hikes when real estate values go way up and prevent big tax drops when values drop.
Delayed appraisals are also what’s keeping taxes up while home prices are dropping. Pennsylvania has some counties that have not done major reappraisals for decades. They are not alone. Elsewhere, homeowners must pay taxes on peak values for years before new assessments reflect the dropping prices.
WHAT’S HOLDING YOU BACK?
Taxes are a big expense for all homeowners—usually at least $3,000 a year. The property owner should review and consider appealing their taxes once a year to reduce this large expense. While there is no guarantee you will win your appeal, a recent survey indicated that 70% of real estate tax appeals are successful. So if you have a seventy percent chance of winning, what’s holding most people back?
Out of sight, out of mind. Mortgage companies make most real estate tax payments. Since you are not writing that large check each month, you might not feel the sting of the payment directly. Here are some other common reasons people don’t try to reduce their property taxes.
1. The process seems intimidating, and they do not know how to appeal.
2. They do not think they will win their appeal. A victim of the You can’t fight City Hall Syndrome.
3. They think their home’s assessed value is below market value, and there is no basis for appealing.
4. They do not know that they can appeal on unequal appraisal.
5. They are busy and do not want to take the time to put in an appeal to reduce their property taxes.
WHY SHOULD YOU APPEAL?
The typical appeal hearing takes less than an hour. And most property tax appeals are resolved at the informal hearing, which is the first step you take in the appeal process. Consider an appeal for a $150,000 house where the property taxes are reduced by 5%. This would reduce the assessed value by $7,500 and the property taxes by $225, based on a 3% tax rate.
YOU HAVE TO TAKE ACTION TO WIN
Three dozen residents in Sandy Springs, Georgia, were fighting a proposed expansion of the local school. They also filed a property tax appeal to get up to a 12% reduction in their property tax. They based their appeal on the increase in school traffic and inconvenience that it caused. Claiming that the before and after school traffic created a nuisance to the neighborhood.
One woman organized an email campaign, asking neighbors interested in exploring the traffic situation to lower their property taxes. They went to the County Board of equalization and presented their case. The board members said they were shocked that there were not more residents there to present their case. The Homeowners who appealed got between a 4 and 12 percent reduction in their tax bills.
SOME STEPS YOU CAN TAKE RIGHT NOW TO GET LOWER PROPERTY TAXES
1. County assessors often use the drive-by technique when assessing residential real estate. So it would help if you looked for obvious errors in the description of your house in the official records, such as incorrect age, square footage, condition, or acreage. If you find a mistake, document it with blueprints, surveys, photographs, and inspection reports.
2. Compare the assessed value of your house with the assessments on similar homes in your neighborhood. This is public information and is available at your local property tax assessor’s office.
3. Get a real estate agent or your assessor to give you a list of all the sales within the past 12 months in your neighborhood. Identify three to six homes that are similar to yours and located near your property.
You can get lower real estate taxes. One survey showed that only 7% of people ever appeal their real estate taxes. Imagine what it would be like to lower your property taxes and have hundreds, even thousands of dollars extra to spend on you and your family. It can happen, but you have to take action. Don’t wait. You’ll wait your life away.