Challenging Your Property Tax Assessment

5 Tips to Increase Success Rates

Challenging Your Property Tax Assessment

Property tax in the United States is the main contributor to local government revenue. It helps fund several important government functions such as public works, local government salaries, sanitation, and several others. While local governments benefit from property taxes, real estate owners usually bear a part of the brunt of financing their counties by settling their property tax bills.

The frequency of property tax assessments varies from state to state and it can range anywhere from five to seven years, or only upon the sale or refinancing of a property. The onus, however, remains on every homeowner to ensure that their assessment is fair or accurate and that their property tax is paid as and when due. Failure to do so often results in hefty fines or some other legal action taken against them, something no property owner wants to experience.

Understanding Your Property Tax Assessment

A property tax bill is usually dependent on the assessment made by the local government. It is calculated by multiplying the value of your property with the current local tax rate, often called a mill rate, and any exceptions the property owner might qualify for.

Unlike a mortgage, property tax is one expense that will never go away. When purchasing real estate, most prospective owners often overlook the tax implications (and other expenses) that their property will incur. By doing this, they set themselves up for disappointment when their local government posts their tax bill and the amount is not exactly what they envisioned.

It is therefore important that early in the buying process the discerning homeowner takes the time to know and understand all the financial implications of owning a home, including and especially all the tax implications.

Can You Challenge Your Property Tax Assessment?

It’s no secret that the process of collection and assessment of property tax is often riddled with errors ranging from miscalculations to exorbitant tax rates. An incorrect tax assessment can result in more expense for the owner as they will be required to pay more than they should.

This is why it is important for the savvy property owner not to take their tax bill at face value but to actually check to see if the calculations correspond to their specific property. And if there is any indication of a discrepancy then the tax assessment should be challenged accordingly. After all, real estate should be an investment, and not a liability.

5 Tips to a Successful Assessment Challenge

Deciding to challenge your tax assessment can often be viewed as a stressful process but it doesn’t have to be. The property owner has a higher chance of achieving success if they are equipped with the right information. While success is never guaranteed, the following tips should give you higher chance of lowering your tax bill.

Step 1: Knowledge is power

A good way to kickstart the process of challenging your tax assessment is to actually read and understand your assessment letter. While this may seem pretty basic, it is crucial as most people tend to overlook the fine print. An easy solution to this is enlisting the help of a real estate attorney, agent or property appraiser who can make it easier to understand the jargon and help you decide on whether challenging your tax bill is worth your time and effort.

This person can also help you learn about the appeal process so that you can be aware of important dates and other details you might have otherwise not know about.

Another benefit of fully understanding your tax assessment letter is that it will show you how the municipality reached the figure on your tax bill. By understanding how the number was reached, the property owner will be in a better position to accept or discredit the information used.

Step 2: Review tax data

Part of the process of challenging your tax assessment is to ensure that the municipality used the correct data for your property. The data has to reflect the current true value of your property, the correct tax year and rate the county uses.

The reality of the situation is that local government assessment officials sometimes use a property’s assessed value which might be different from its actual and true worth on the open market. This is why you must be mindful of any errors or inconsistencies in your assessment letter and if anything is unclear, it is in your best interest to question it.

This prevents you from being stuck with unnecessarily high taxes that can take out some of the joy of your property investment. Also, be sure to use data from previous years to keep track of the tax changes.

Step 3: Advantages of Comparison

After reviewing your tax data, it is a very good idea to compare it with similar properties in your neighborhood. Look for homes that have the same characteristics as yours in terms of description, square footage, amenities and value. You can conduct research online or by visiting your local library to check tax records in your area.

The benefit of comparing your neighbors’ tax records to your own helps to gauge in which tax bracket your property is meant to fall under. If you discover that similar properties have lower taxes than yours, then you are a step closer to refuting your tax assessment.

Step 4: Preparation is key

A strong and convincing argument will increase the odds in your favor, while facts have been known to sway even the strongest of cases. Armed with the tax data you collected, you can now begin to build your case. Pay strict attention to deadlines, procedures and supporting documents. Most importantly, leave no room to chance.

Step 5: Get the ball rolling

After all is said and done, you actually have to take steps to get the appeal process in motion. Each county or state will usually have their specific processes and deadline for how and when a property tax assessment challenge can be lodged, so putting it off might not be in your best interest.

Lastly, it is important to manage your expectations. Sometimes the city of county might take weeks even months to respond to or deal with your tax appeal. You should, therefore, be prepared to wait it out because it is not an instantaneous process.The good thing is that if you have followed the above steps to challenge your tax assessment, there is a greater chance of achieving success at the end of the process.

personal finance
Kanayo Okwuraiwe
Kanayo Okwuraiwe
Kanayo Okwuraiwe

Kanayo Okwuraiwe is a startup founder, and a digital marketing professional. He is the founder of Telligent Marketing LLC, a digital marketing agency that provides law firm SEO services to help lawyers grow their law practices.

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