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Property Taxes
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HOW

 

TO SAVE

 

BIG MONEY

 

IN

 

PROPERTY TAXES

 

 

 

 

 

 

TABLE OF CONTENTS

Introduction 3

Educate Yourself 5

Look for Mistakes 6

Challenging Your Assessment 7

Informal Meetings 8

Formal Appeals 9

Summary of Assessment Offices 11

 

 

 

INTRODUCTION

Of all the taxes you pay, probably none delivers more tangible benefits than the property tax you send to your city, town, or county. Real estate taxes are the lifeblood of local governments, accounting for some three quarters of their budgets for schools, sanitation, parks, and public safety--in short, for just about everything that makes the quality of life in your community what it is. But even if you're satisfied with what your property-tax dollar buys, you should not have to pay more than your fair share.

Your local tax office computes your annual property-tax bill by multiplying the local tax rate by the assessor's estimate of what your home and the lot it sits on are worth. The rate is set by your community's elected officials and applies equally to everyone. However, if you pay substantially more than your neighbors do or if your locality hasn't had a general property revaluation in several years, your tax assessment may be too high.

What do the records show?

The most basic errors arise from a simple mis-description of your property in the municipal records, and this is where you should look first if you suspect a problem. The listing should specify the lot size, type of construction, number of rooms, and so forth.

Overworked assessors usually cannot inspect every property they are required to value. Often they rely on casual "drive by" assessments, leading to mistakes in the property records--an extra bedroom here, a bath there, a garage instead of a carport. The assessor may also have missed defects such as a cracked foundation, a leaky roof, or pest infestation that could significantly reduce a home's value. Undesirable environmental conditions, such as unusually heavy local traffic from a nearby freeway, can also lower a property's value and may be grounds for a tax reduction.

Assessing the assessment

Most municipalities try to peg the assessed values of properties in their jurisdictions to the actual market values. However, unless the properties are re-appraised often--something few communities do--the valuations tend to drift apart.

Some states try to bridge the difference during periods between full-scale reevaluations by applying a so-called "assessment ratio." In one New Jersey city, for example, a home carried on the tax rolls as having a market value of $100,000 would be taxed as if it were worth $106,952, after its ratio- currently 93.5 percent--is applied. A homeowner who thinks this figure overstates the market value can challenge it, although in the Garden State, unless an assessment exceeds the estimated market value by more than 15 percent, the assessor's computation will prevail.

Many owners may be lulled by an apparently low valuation into thinking that their tax bite is lighter than it truly is. That's because some states tax properties on just a portion of their assessed value, as little as 10 percent in Louisiana. A fractional valuation, however, can mask a high assessment. For example, if you live in a $100,000 condo located in a state with a 25 percent valuation and your property is misassessed at $30,000, your tax would be equal to that of a neighbor living in a home worth 20 percent more.

Making your case

There are several ways to document a claim that your assessment is too high. The easiest is to point out obvious discrepancies between the description of your home in the official tax records and its actual condition. Often the assessor's office will adjust your record on the basis of a single meeting if you can produce compelling evidence that the assessment is incorrect. You can also buttress your claim by tracking recent sales of three to five homes that are similar to yours and located nearby. A local Realtor, Consumer Reports Home Price Service, or even the assessor's own records can help identify these comparable properties. If the potential savings warrant the expense, you may wish to hire an appraiser who is certified or licensed by your state to prepare a customized valuation of your home. Expect to pay between $400 and $500 for this service.

A formal appeal usually requires a hearing before the local appraisal review board. Typically, you'll have to pay all taxes due while your appeal is pending, though some municipalities will give a refund if you win your claim. Daunting as it sounds, most homeowners can manage an appeal by themselves. If you don't want to go it alone, a local real estate agent may be able to refer you to a property-tax consultant or an experienced attorney.

If too many owners challenge their tax bills successfully, of course, a local government would have to ratchet up the tax rate to provide the services residents say they want. But that's a fair way to meet the community's needs and one that lets the citizens determine what good government truly costs.

STEP 1: EDUCATE YOURSELF

When it comes to property taxes, timing is everything. First, call the assessor's office to find out the two crucial tax dates for your community. The first is called assessment or valuation day. It's when the information the assessor has on your home becomes the basis for assessing its value. The second is called the tentative roll date. This is when the town tentatively sets the actual tax amount individual homeowners will pay.

Start working on your appeal between those two dates. Most states require that you be notified after the tentative role is set if there is a change in the market value, assessed value or tax rate of your home. Although the notice includes a deadline for filing an appeal, often the date doesn't leave enough time to gather and submit the information, forms and proof needed to make your case. Miss the deadline, and you forfeit your right to appeal until next year. Give yourself more time by beginning to check the information used to determine your assessment before the tentative assessment role is set.

While you're checking on the exact dates with the assessor make an appointment to review the property-record card for your home. It includes lot and house size, the number of rooms and everything else used to compute the assessment of your home. You'll probably have to dig out an old bill to get your home's identification number for the assessor.

Then visit the assessor's office to copy the card for your records. While there, find out the guidelines for challenging your assessment and what constitutes proof. The assessor might also have brochures to help you through the process. Some states even have advocates who help you prepare and file your appeal. So be cordial. Another tip: "Don't call them tax assessors," says Joseph Hesch, the public information spokesman for the New York State Office of Real Property Services. "They're very sensitive about that because they assess value, not taxes. Politicians set taxes," notes Hesch. Simply call them assessors.

STEP 2: LOOK FOR MISTAKES

Take the property-record card home and carefully examine it for mistakes. Look for glaring errors such as the wrong number of rooms, a listing for a garage when you don't have one and dimensions for a lot larger than the one you own. Call the assessor's office immediately if you find any mistakes, in some locales, your word alone might be enough. But most municipalities require proof--photos, blueprints or inspection reports. Ask the assessor what's needed.

Although the information on your property card should be accurate and current, correcting a mistake won't always reduce your assessment. "If the error doesn't change your home's market value much, it won't affect your assessment," says Hesch.

What if the error is in your favor? Experts say you should probably admit it, especially if you plan to challenge the assessment on other grounds.

Your property-record card should also list any exemptions you're entitled to. Exemptions lower the assessed value of your home by a certain percentage. Common ones are those for senior citizens and veterans or spouses of veterans. Less common exemptions include those for low-income home owners, disabled victims of crime and those whose property is located in an economic improvement zone.

Exemptions for energy-efficiency improvements, restoration of historic structures and improvements that make a home more accessible to the disabled usually exempt only the value of the improvement from the assessed value of a home. Check with local and state authorities to find out available exemptions in your area.

STEP 3: CHALLENGING YOUR ASSESSMENT

If your property-record card is correct, or if correcting it has not changed your assessment, there still are two other grounds for appeal: excessive assessment and unequal assessment.

Excessive assessment simply means your home is worth less than its assessed value. If you refinanced your mortgage within the past year, your bank or lender will have had your property professionally appraised. Get a copy of the report and see if this recent market value is lower than the one set by the assessor's office. If it is, use the report as proof.

If you haven't refinanced recently, check with local Realtors for the addresses and selling prices of similar homes in your area. The assessor's office can also help you locate comparable homes. Or you can pinpoint recent sales using a phone-in search service. These firms typically charge by the minute for phone time. Remember, the more evidence you gather, the better.

Having your home re-appraised is the most expensive option, though it's often the most effective. The word of a licensed appraiser will have more weight than other types of information. Professional appraisals typically cost $100 to $400. But unless you expect to reap large gains, a reappraisal might not be worthwhile. It's also possible that the value of your home has been decreased by conditions the assessor's office isn't aware of or has not considered. A cracked foundation, termite or carpenter ant infestation, the building or widening of a road next to your home or the placement of a new factory or dump nearby can all lower property values. So can environmental hazards such as radon, asbestos or lead in your home or a buried oil tank in your yard or driveway. But you'll have to prove it, and environmental hazards are trickier to prove than other conditions, since their effect on value isn't well documented.

Again, local Realtors can help you by revealing how home sales have been affected by these problems. Realtors can also provide information on cleanup cost. This is an effective way to determine how much each condition lowers the value of your home, since most buyers would want the problem remedied or the asking price reduced by that amount. Remember; get addresses and information on asking and selling prices in writing.

Unequal assessment means your home has been assessed at a higher value than comparable homes in the area. For example, suppose the value of your house has been assessed at $200,000. If you can prove the value of a similar home in your neighborhood has been assessed at $175,000, you can challenge your assessment on the basis of unequal assessment and have the assessed value of your home reduced.

STEP 4: INFORMAL MEETINGS

Think of the appeal process as a ladder. The first rung is requesting an appointment with an assessor. No forms. No costs. No sworn testimony. But don't be lulled into thinking this informal meeting is a simple chat where you point out errors and the assessor fixes them. Be prepared to prove your case. You should know what you want and why you're entitled to get it. And you should have all your evidence with you, including an extra copy for the assessor to examine while you talk.

Pay particular attention to the questions assessors ask; they're clues to what he or she thinks is important. Be calm, yet firm and persistent. Remember, what you're challenging is your assessment, not your taxes. Start proclaiming that your taxes are too high, and you'll lose credibility. Depending on the laws in your area, your assessor might not be able to change much at an informal meeting. If you get only some or none of what you ask for at this time, find out why. This is the part of your case you need to strengthen when you move up the ladder to a formal meeting.

STEP 5: FORMAL APPEALS

Formal appeals are not automatic. You must request one, get the proper forms, follow their directions to the letter and submit the forms and evidence by the deadline given.

Your local or state authorities probably have pamphlets to help you fill out the paperwork. They might even have staff or advocates who can help. Another good source to check at this stage is the case files of your local board of review - where your formal appeal begins. These records are public. Examine cases similar to your own to learn which strategies and evidence worked and which didn't as you prepare.

Most important, be careful what you ask for. In some states, you can only get the reduction you ask for even if circumstances show you should get more.

Your first formal appeal essentially is a hearing at which you present your evidence and the assessor also gives testimony. Again, it's up to you to prove that the assessor is wrong. Also remember that your case is probably one of many the board will hear. Make it stand out by being well-presented, well-organized and mercifully to the point. The board's decision will be mailed to you.

Even if your first formal appeal is successful, you will probably have to pay your taxes and then get a refund. And there might be some nominal costs for processing your paperwork. If you're not satisfied with the decision by the board, you might be able to appeal to a county or state board depending on laws in your area. There will be new forms to fill out and deadlines to meet and, possibly, more costs involved. But for all practical purposes, it's the same show for a different audience.

Before you take your show on the road, read the decision from your local board and make a photocopy of your case file. Why didn't you win? What points didn't you make during the appeal? Why wasn't the board convinced? Learn from your mistakes and capitalize on any the assessor made. Then be sure you really have something to add that will convince the county or state board that the local board and assessor's office are wrong. If you lose this second formal appeal, you can still take your case to court. But at that point you'll probably want to get yourself some legal help.

Challenging your property assessment is not without potential downsides. There's a chance the information that you uncover during the appeal process will result in raising your assessment, which will increase your taxes. Your local assessor's office can tell you this before you undertake the appeal. But in many cases, attempting to slash your property taxes is virtually a no-risk opportunity. And those are the best kinds.

STATE BY STATE SUMMARY OF ASSESSMENT OFFICES

State of Alabama

Department of Revenue

Ad Valorem Tax Division

Montgomery, Alabama 36132-7210

(205) 242-1525

State of Alaska

Dept. of Revenue

Petroleum Revenue Division

550 W. 7th Ave.- Suite 300

Anchorage Alaska 99501

(907) 276-2678

 

Arizona Dept of Revenue

Division of Property Valuation

Jane McVey- Asst. Dir

1600 W. Monroe St.- 8th Floor

Phoenix, Arizona 85038

(602) 542-3529

Arkansas Assessment Coordination Div.

Public Service Commission

John Zimpel

1614 W. Third

Little Rock, Arkansas 72201

(501) 334-9240

California State Board of Equalization

Dept. of Property Taxes

Assessment Standards Division

Verne Walton, Chief

1719 24th St. (P. O. Box 942879)

Sacremento, California 94279-0001

(916) 445-4982

Colorado Division of Property Taxation

1313 Sherman St.- Room 419

Denver, Colorado 80203

(303) 866-2371

State of Connecticut

Office of Policy and Management

Intergovernmental Relations Divisions

Donald Zimbouski

80 Washington St.

Hartford, Connecticut 06106

(203) 566-8070

Director of Revenue

Delaware Division of Revenue

Wilmington, Delaware 19801

(302) 571-3315

Real Property:

Hermon C. Ricks

Acting Associate Dir.

Real Property Assessment

300 Indiana Ave. NW- Room 2132

Washington, DC 20001

(202) 727-6447

Florida Dept. of Revenue

Division of Ad Valorem Tax

John Everton, Director

Woodcrest Office Bldg. (PO Box 3000)

Tallahassee, Florida 32315

(904) 488- 3338

Georgia Dept. of Revenue

Property Tax Division

Larry Griggers, Dir.

405 Trinity- Washington Bldg.

Atlanta, Georgia 30334

(404) 656-4240

Hawaii

The state has no responsibility for property.

Administrative responsibility for taxation of

property is at the county level.

State of Idaho

Dept. of Revenue and Taxation

State Tax Commission

Real and Personal Property Bureau

700 W. State St. (PO Box 36)

Boise, Idaho 83722

(208) 334-7733

Illinois Property Tax Appeal Board

404 Statton Bldg.

PO Box 19278

Springfield, Illinois 62794-9278

(217) 782-6076

State of Indiana

State Board of Tax Commissioners

State Office Bldg.- Room 201

Indianapolis, Indiana 46204

(317) 232-3761

Iowa Department of Revenue and Finance

Local Government Services Division

Hoover State Office Bldg.

Des Moines, Iowa 50319

(515) 281-4040

Kansas Department of Revenue

Division of Property Valuation

David C. Cunningham, Director

526-S Robert B. Docking State Office Building

Topeka, Kansas 66612-1585

(913) 296-2365

Commonwealth of Kentucky

Department of Property Tax, Revenue Cabinet

Billy Whitaker, Director of Real Estate

592 East Main Street

Frankfort, Kentucky 40620

(502) 564-8338

Louisiana Tax Commission

Property Tax Division

Donald Strain, Director

923 Executive Park Avenue

Suite 12 (PO Box 66788)

Baton Rouge, Louisiana 70896

(504) 925-7830

State Tax Assessor

Property Tax Division

Bureau of Taxation

Augusta, Maine 04330

(207) 289-2011

State Department of Assessment and Taxation

Lloyd W. Jones, Director

301 West Preston Street

Baltimore Maryland 21201

(301) 225-1184

Commonwealth of Massachusetts

Department of Revenue

Division of Local Services

Harry M. Grossman, Chief

Property Tax Bureau

200 Portland Street

Boston, Massachusetts 02114-1715

(617) 727-2300

State of Michigan

Department of Treasury

State Tax Commission

John Person, Director Property Programs

4th Floor- Treasury Building

Lansing, Michigan 48922

(517) 373-0500

State of Minnesota

Department of Revenue

Michael P. Wandmacher, Director

Local Government Services Division

Mail Station 3340

St. Paul, Minnesota 55146-3340

(612) 296-2286

Robert M. Megginson, Director

Property Tax Bureau

Mississippi State Tax Commission

PO Box 960

Jackson, Mississippi 39205-0960

(601) 359-1076

State Tax Commission of Missouri

Rose Kaiser, Administrative Secretary

621 East Capitol Avenue

PO Box 146

Jefferson City, Missouri 65102-0146

(314) 751-2414

State of Nebraska, Department of Revenue

Larry D. Worth, CAE- Administrator

Property Tax Division

PO Box 94818

Lincoln, Nebraska 68509

(402) 471-5960

Nevada Department of Taxation

Division of Assessment Standards

John P. Comeaux, Director

Capitol Complex

1340 S. Curry Street

Carson City, Nevada 89710-0003

Richard M Young, Director

Property Appraisal Division

State of New Hampshire

Department of Revenue Administration

61 South Spring Street

PO Box 456

Concord, New Hampshire 03301

(603) 271-2191

State of New Jersey

Division of Taxation

Department of the Treasury

Appraisal Section

John R. Baldwin, Director

50 Barrack Street

Trenton, New Jersey 08646

(609) 292 7974

State of New Mexico

Taxation and Revenue Department

Property Tax Division

PO Box 630

Santa Fe, New Mexico 87509-0630

(505) 827-0700

State of New York

Executive Department

Division of Equalization and Assessment

Robert L. Beebe

16 Sheridan Avenue

Albany, New York 12210-2714

(518) 474-8821

North Carolina Department of Revenue

Property Tax

Frank S. Goodrum, Director

PO Box 871

Raleigh, North Carolina 27602

(919) 733- 7711

State of North Dakota

Office of State Tax Commissioner

Charles S. Krueger

Deputy State Supervisor of Assessments

State Capital

Bismarck, North Dakota 58505

(701) 224- 3127

State of Ohio

Department of Taxation

David Stone, Assistant Administrator

Tax Equalization Tax Division

State Office Tower

PO Box 530

Columbus, Ohio 43266-0030

(614) 466-5744

Oklahoma Tax Commission

Ad Valorem Tax Division

Robert L. Hartman, Director

M.C. Connors Building

2501 N. Lincoln Boulevard

Oklahoma City, Oklahoma 73194

(405) 521- 3178

Oregon Department of Revenue

Property Tax Division

George Weber, Administrator

Revenue Building

955 Center Street, N.E.

Salem, Oregon 97310

(503) 378-3022

Pennsylvania

The Commonwealth of Pennsylvania has

no power over the local or county assessment

or collection of taxes on real property. The

Commonwealth does not get involved except

through the court system when a taxpayer pursues

relief through the courts for an alleged overassessment.

Mr. Charles Munsch

Supervisor of Tax Equalization

Department of Administration

275 Westminster Mall

Providence, Rhode Island 02903

(401) 277- 2885

South Carolina Tax Commission

Property Division

James L. Brodie, Director

PO Box 125

Columbia, South Carolina 29214

(803) 737- 4485

South Dakota Department of Revenue

Division of Property Taxes

Linda Osberg, Director

700 Governors Drive

Pierre South Dakota 57501-2276

(605) 773- 3311

 

Division of Property Assessment

Tom Fleming, Director

505 Beaderick Suite 1400

Nashville, Tennessee 37243

(615) 741- 2837

State Board of Equalization

Kelsie Jones, Executive Secretary

505 Beaderick, Suite 1600

Nashville, Tennessee 37243

(615) 741- 4883

The State of Texas

State Property Tax Board

Leon Willhite, Director

4301 W. Bank Dr. Suite 210

Austin, Texas 78746-6565

(512) 329- 7901

Utah State Tax Commission

Property Tax Division

Mike Monson, Director

Herbert M. Wells Building

160 East 300 South

Salt Lake City, Utah 84134

(801) 530- 6297

State of Vermont

Department of Taxes

Division of Property Valuation and Review

43 Randall Street

Waterbury Vermont 05676

(802) 241- 3500

State of Virginia

Department of Taxation

Property Tax Division

Otho C.W. Fraher, Director

PO Box 6-L

Richmond, Virginia 23282

(804) 367- 8020

 

 

 

State of Washington

Department of Revenue

Property Tax Division

Will Rice, Director

General Administration Building

Olympia, Washington 98504-0090

(206) 753- 5503

State of West Virginia

Department of Tax and Revenue

Property Tax Division

PO Box 2389

Charleston, West Virginia 25328

(304) 348- 3940

State of Wisconsin

Department of Revenue

Bureau of Property Tax

Glenn Holmes, Director

PO Box 8933

Madison, Wisconsin 53708

(608) 266- 1187

State of Wyoming

Department of Revenue and Taxation

Ad Valorem Tax Division

122 West 25th Street

Cheyenne, Wyoming 82002

(307) 777- 7215

 

 

 

 

 

 

 

 

 

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