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Many homeowners discover that their property is not valued at fair market value, in these situations, the homeowners need to file property tax appeals. Before filing a property tax appeal, a homeowner needs to consider the investment of the appeal and the potential savings they will will receive. If a homeowner expects to remain in the house for many more years, a property tax appeal can lead to significant long term savings.
Speak with a Tax Consultant or Property Tax Lawyer
Before taking any action on property tax appeals, a homeowner needs to discuss their options with a tax consultant or property tax lawyer. This person will be able to assist them in determining the cost of the appeal and the potential savings. This person will also understand the state or county tax laws, and can guide the homeowner through the property tax appeals process. Because laws vary on a state-by-state basis, the tax specialist is an essential member of appeals process.
Determine the "Tax Value"
Market value for property tax purposes is very different from "real world" market value. Real world value is typically based on the amount of money that changes hands in a purchase. Market value for property tax purposes is more hypothetical. Property tax value evaluates the market rent and vacancy rather than the actual cash flow. Property tax value also does not consider potential business value of a property. This is particularly applicable in property belonging to hotels, stores, or health care facilities.
Compare Your Neighbor's House Values
You've watched your neighbors sell their homes for dramatically lower prices. Before you appeal your property tax, search public records for their homes as well as your own. Of course, home values are affected by many factors (square footage, number of bathrooms, etc.) but comparable homes in the same neighborhood should share approximately the same value.
Correct Any Mistakes
Mistakes happen more often than you think. Appraisers may not even step foot on your property when they write an appraisal, instead comparing your home to nearby houses and historical information. Obvious mistakes, such as an inaccurate square footage, are easy to spot, but you should still compare the tax appraisal with a recent private appraisal. The assessor may also have a different view of your home; for example, they may have counted a screened-in porch as a year-round living space while you only use it during the summer. Finally, make sure any property changes are reflected accurately. This may include an addition that you built, a garage that you tore down, or even a nearby bridge that has gone out and therefore made your home less accessible.
Heading to Court
In some cases, you may need to protest the assessment in a court hearing. Before the hearing, know all the deadlines and guidelines, and follow them to the letter. Gather all your evidence and put it in order. You may want to consider sitting in on another hearing before your own so that you will know what to expect. Dress nicely and remain professional throughout the process. If the court doesn't rule in your favor, many states have an appeals board where you can take your case. This will be cheaper than filing a lawsuit in civil court.
Tax Deductions
Regardless of what your real estate tax bill may be, remember that you can take that amount as a deduction on your federal tax return. Some states also allow property taxes to be deducted off of state taxes, but rarely will you be able to deduct your property taxes off of both state and federal taxes.
Speak with a Tax Consultant or Property Tax Lawyer
Before taking any action on property tax appeals, a homeowner needs to discuss their options with a tax consultant or property tax lawyer. This person will be able to assist them in determining the cost of the appeal and the potential savings. This person will also understand the state or county tax laws, and can guide the homeowner through the property tax appeals process. Because laws vary on a state-by-state basis, the tax specialist is an essential member of appeals process.
Determine the "Tax Value"
Market value for property tax purposes is very different from "real world" market value. Real world value is typically based on the amount of money that changes hands in a purchase. Market value for property tax purposes is more hypothetical. Property tax value evaluates the market rent and vacancy rather than the actual cash flow. Property tax value also does not consider potential business value of a property. This is particularly applicable in property belonging to hotels, stores, or health care facilities.
Compare Your Neighbor's House Values
You've watched your neighbors sell their homes for dramatically lower prices. Before you appeal your property tax, search public records for their homes as well as your own. Of course, home values are affected by many factors (square footage, number of bathrooms, etc.) but comparable homes in the same neighborhood should share approximately the same value.
Correct Any Mistakes
Mistakes happen more often than you think. Appraisers may not even step foot on your property when they write an appraisal, instead comparing your home to nearby houses and historical information. Obvious mistakes, such as an inaccurate square footage, are easy to spot, but you should still compare the tax appraisal with a recent private appraisal. The assessor may also have a different view of your home; for example, they may have counted a screened-in porch as a year-round living space while you only use it during the summer. Finally, make sure any property changes are reflected accurately. This may include an addition that you built, a garage that you tore down, or even a nearby bridge that has gone out and therefore made your home less accessible.
Heading to Court
In some cases, you may need to protest the assessment in a court hearing. Before the hearing, know all the deadlines and guidelines, and follow them to the letter. Gather all your evidence and put it in order. You may want to consider sitting in on another hearing before your own so that you will know what to expect. Dress nicely and remain professional throughout the process. If the court doesn't rule in your favor, many states have an appeals board where you can take your case. This will be cheaper than filing a lawsuit in civil court.
Tax Deductions
Regardless of what your real estate tax bill may be, remember that you can take that amount as a deduction on your federal tax return. Some states also allow property taxes to be deducted off of state taxes, but rarely will you be able to deduct your property taxes off of both state and federal taxes.
