Millions of homeowners have no idea they can actually lower their property taxes. They casually glance — or grimace — at their mortgage escrow notice every year and pony up without doing a thing.
Despite possible savings of thousands of dollars, only 2% of homeowners appeal their assessments, which is the first step in lowering taxes.
And here’s an even bigger disconnect: Some 60% of properties are overvalued by assessors, according to the National Taxpayers Union. Having fought for fair assessments for more than a decade as the co-founder of a non-profit, taxpayer advocacy organization, I can tell you most homeowners have no idea how the tax valuation process works.
Surprisingly, in most cases, getting a break on property taxes isn’t difficult. You may be able to obtain some relief from your local assessor. I trimmed $500 from my bill last year. Here are five things you can do:
— Check your property description. If your assessor has you down for four bedrooms — and you only have three — you can correct the error if they visit your property or you submit building drawings. Less living space, of course, means a lower tax bill. Your property description should be accurate in terms of square footage, rooms and amenities.
— Do you qualify for exemptions? You automatically receive a “homestead” exemption for living in your home and not renting it out.
Exemptions are also available for seniors, veterans and the disabled. To find out if you qualify, check out your assessor’s website or call them.
— Are you overassessed? The simplest rule of thumb for an appeal is that the assessor’s market estimate of your home is more than you think you can sell it for. This is a fuzzy estimate, but if you think you’re overassessed, you can always appeal.
You can get a range of what your property’s worth by going to Zillow or contacting a local real estate agent. Just note that market values are often rough estimates. The real value of your home is what someone is willing to pay for it at closing.
Assessors give you a window of at least 30 days to appeal your assessment notice. But you have to jump on the appeal process within that period or you have to wait another year.
You will also need to know your county’s equalization factor, which is a number that is used to multiply your assessed value. This number indicates market conditions and other factors.
Unfortunately, you can’t challenge your final tax bill directly, although you can certainly protest it (pay your tax bill or you can lose your home!). Your total assessment (equalized) property valuation times your local tax rate will give you your annual property tax bill.
In most cases, you can prove your assessment appeal case with three lower-assessed properties of comparable square footage and features. You want apples-to- apples comparisons, but you will likely have to go through your county’s tax appeal process.
— Your property has some special issues. Let’s say a natural disaster hit your neighborhood and a tree fell on your house or there’s other damage you haven’t been able to repair. Or your neighborhood was flooded.
You can note these circumstances and ask for a lower assessment.
— You transacted a recent sale and have a current appraisal. If a professional appraiser says your house is worth less than its assessed value, that’s usually pretty solid evidence.
You can also obtain a new appraisal, but it will cost you several hundred dollars. If the appraisal makes your case for a lower assessment, then it could be worth it.
Keep in mind that you’re not directly appealing your tax bill. By they time you get that, you can’t really do much of anything. Tax rates are set by local bodies such as school districts, villages and other agencies. Unless they lower their rates (or levies), there’s not much you can do.
In any case, it always makes sense to appeal. You may not be able to lower your tax bill, but it’s worth a try. The assessment process is often opaque and not always uniform. It’s up to you to challenge it if it’s unfair.