Reduce your Housing Costs: Appeal your Property Taxes

If your property's value has gone down, you may have a case for appealing your property taxes-even if your municipality is trying to raise them.

If singer Dionne Warwick can plea bargain her way out of drug charges, and Mel Gibson can do the same to avoid jail time, you may be able to follow a similar strategy to sidestep property tax increases.

Property tax increases are appearing more and more, as municipalities search for ways to overcome budget shortfalls. But given the sheer drop in home prices and housing values since mid-2006, property owners around the country may have the opportunity to fight back against these tax increases. Even better, those homeowners may even have a case for lowering their property tax assessment going forward.

Bad mortgages, foreclosures eating into home prices

Here's how property tax systems generally work, and why you might be entitled to appeal your assessment. Your taxing authority calculates your bill by applying a property tax rate to the taxable value of your home. Depending on where you live, that value may not be the same as the home's market value-but the two figures will at least be directly correlated. This means that when housing values dip, taxable values should, as well. 

This is the bright spot amid the tsunami of defaulted mortgages and foreclosures that are pulling home prices down. The trend gives you the ammunition you need to have your property taxes reduced.

Property tax appeal basics

Before you can appeal your taxes, you must identify the inaccurate assumptions or calculations in your current assessment amount. Do this by:

• Learning how taxable property value is calculated in your area
• Researching recent home sales in your neighborhood; document the sale prices of similar homes, including foreclosures
• Documenting any structural problems that would cause your home to be worth less than similar homes in your neighborhood
• Consulting with a local realtor to help you determine your home's market value
• Obtaining a copy of the property assessment record or property assessment worksheet for your home
• Verifying that the size of your lot and the features of your home are accurate on the assessment record

Once you have a list of documented errors, contact your property tax authority and inquire about the appeals process. Use the information you've gathered to calculate a new assessment amount. Then, prepare your appeal as required by the tax authority, making sure to include the documentation to support your claim.

Just as Dionne and Mel had to do more than ask to be released from their respective punishments, you have to do more than ask nicely for a lower property tax bill.  You basically need to prove why your current assessment is too high. When every penny in your budget counts, a successful appeal will be ample reward for your efforts.