Often, people believe that the property tax bill they receive from their local government is set in stone. The property tax bill is tied to a report prepared by the local tax assessor, based on the assessor's estimation of the market value of your property. Property assessing is an inexact science, so you may have grounds to challenge your bill and save hundreds, or even thousands, of dollars in annual taxes.
Tax Assessments Are a Local Process
Property taxes are set at the local level. Each locality has its own procedure for establishing the amount of taxes owed by people who own property within its borders. The locality sets its own appeal process for property owners to dispute a tax assessment. The first step in challenging your property tax bill is to research the property tax policies in your area.
Determine the Benefit of an Appeal
The time and effort that it will likely take to challenge a tax assessment may not be worth the effort. Before you start the appeal process, it's important to determine the likely amount of money you will save per year on your tax bill. Also, lowering your tax assessment may not result in a tax savings because of any tax breaks attached to your property that bring the taxable base below the market value. Tax breaks can include discounts for certain types of property owners, such as the elderly and veterans, or discounts for owning property in certain distressed locations. Most localities re-assess property every three to five years, so it may make more sense to wait rather than to challenge.
Challenge the Accuracy of an Assessor's Work
You can challenge a tax assessment based on the accuracy of the work conducted by the assessor. The assessor uses information on the property's record card to determine its market value. The card contains information such as square footage, condition of the property, and property features. If any of this information is incorrect, the assessor's valuation may be off. If the square footage on the property record card is incorrect, it is possible that the tax assessor has overvalued your property.
A Challenge Based on Market Value
Tax assessors use the sale of comparable properties at the time of the assessment to establish the market value of a property. You are effectively taxed on the amount for which you could sell your property at a certain point in time. If the value of your property decreases after the assessment, you may end up paying taxes on a sales price that you can no longer receive on the open market. You can challenge your tax assessment by showing current sales of comparable properties at reduced prices.
A Tax Lawyer Can Help
The law surrounding challenges to property tax assessments is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a tax lawyer.