Paying for property tax each year can seriously cut into your wallet as these prices can range from just a few thousand dollars per year to tens of thousands per year. Property tax appeals represent a huge opportunity for many homeowners and real estate investors to keep substantial amounts of money in their pockets each year. But despite the chance to save hundreds or even thousands of dollars each year, very few end up pursuing this opportunity simply due to a lack of knowledge. Many individuals spend so much time living frugal trying to save money (for more information, please see our Top 10 Tips for a Frugal Lifestyle feature), but they often miss this chance to keep some serious cash in their wallet.
The reason for this is that most people are blindly unaware of property tax appeals. Information about property tax appeals and how to save money with them is readily available to anyone who takes the time to look. There are many books on this subject and even just by reading one or two of them, you can vastly increase your knowledge before you begin. In just a few hours, you could have the basics down pat.
The typical property tax is about 1.25 percent of the assessed value of your home. So for example, if you have a home worth approximately $400,000 the property tax on that would be about $5,000 per year. The good thing about property taxes is that you can choose to either pay a lump sum at the end of the year or you can talk to your banking institution and have it set up so that you can pay your property taxes on a monthly basis. This can be very helpful for many, even though it would cost almost $420 per month on top of your mortgage payment. This is why, if your property tax seems a bit high, you might be able to save quite a good chunk of money by looking into it and appealing it.
Why Does Over Assessed Property Tax Happen in the First Place?
First of all, assessing officers are typically understaffed and in many cases, simply can’t keep up with the workload involved with constantly adjusting the property values of hundreds or thousands of properties. The other reason that tax authorities are often slow to lower the property tax value is because it means they will ultimately collect less tax from you. Even though this isn’t fair or justified, it’s how things work. However, don’t get discouraged; more and more property owners are discovering their property’s assessed value has been overstated by tax authorities and are fighting back to save more money.
What Can You Do?
The first thing you need to do is find out the market value of your property and the official assessed value (as determined by the property tax assessor in your area). The most important thing to remember is that the market value rules higher than the official assessed value, so if this value is much lower than what the property tax assessor claims, a property tax appeal could be worth looking into.
So how do you go about starting (and winning) a property tax appeal?
Once again, doing the right research is critical so you want to be sure before you take any drastic action. Therefore, the first thing you want to do is request property tax cards for similar homes to yours (in your area) so that you can compare the annual property tax. As you go through these cards, be aware of many factors which could make the tax potentially higher or lower such as the style of construction, the size of the home, the age of the home etc. As you compare these other homes to your homes, they should all have roughly the same property tax unless they are, for example, custom built. Take a look at many different houses in your neighbourhood, not just one so that you can have a much better view of the amount of property tax on each home.
Compare your findings to the property tax on your home. If the assessed property tax value is vastly higher on your property than the similar properties in the same region, you probably have a good case.
The next step you should take is to write a letter to the property tax assessor stating your findings. It is very important to remain polite and professional while you are doing this; they are much more likely to respond positively if you remain calm, cool and collected.
Conclusion
There is no reason to keep losing hundreds or thousands per year when you have the ability to change all that with just a little bit of research. It doesn’t take very long to find and view similar properties in your area and submit a letter, but the rewards can pay off handsomely. If you think you’re being ripped off and want a reduction in your tax bill and it’s much more complicated than doing a little bit of research on your own, you could also hire a personal property tax consultant or even a real estate attorney to help you with your case.
The image used in this post is taken from Image: renjith krishnan / FreeDigitalPhotos.net
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