When the real estate market was red hot, property tax assessments were keeping right in step with home values. Now that the bubble has burst, it's logical to think that taxes should decrease, too. It may be logical, but it's not realistic. Your property taxes may stay the same, unless you do something about it.
The sight of a municipal property assessor in the neighborhood used to send homeowners diving for cover. No one wanted a reassessment of their home during the real estate boom market. People were happy to have their assessed values lag behind current market prices; an accurate assessment usually meant a jump in property taxes.
The real estate bubble has subsequently burst, and now homeowners are singing a different tune. They want their home values to be congruent with the current market prices, and many are pursuing an appeals process to get their homes reassessed. Here are a few simple steps for you to take to ensure that your home value is aligned with current market conditions:
Understand the process
To understand precisely how your home is assessed, it's important to get inside your municipality's valuation process. Some areas calculate it based on rebuilding costs; others use a percentage of your home's current value. Knowing the methodology will help you learn how the municipality derived their final number.
You should also carefully review the document that describes your home. There's tremendous margin for error with an assessment. If you scrutinize the report, you'll likely find some assumptions about your home that are incorrect. There's also the chance of clerical errors made when entering figures, so give your report the fine-tooth comb treatment.
Keeping down with the Joneses
If prices in your neighborhood have plummeted, your assessor will need tangible proof that your home is being overtaxed. This will necessitate some research on your part. Find the property assessment for similar homes in your area. Make sure that they're comparable in terms of age, size, and features. Your home value must be 10 percent higher than your neighbors'. Anything less than that figure is too close for an assessor to justify a change.
Create a spreadsheet comparing the values and features of different homes. Include as many details as you can and, if your neighbors are willing, take photos. If you stand to recoup a healthy chunk of money, you may want to hire a property appraiser to create an appraisal. This additional back-up could sway the authorities.
Every municipality has a different review process, but if your local property tax assessor rejects your plea, the next step is generally an independent review board. From there, legal action may be necessary, and will be substantially more expensive. However, if you're losing a large amount of money to taxes, the cost may be justified. It will also ensure that the government feels the pinch of a down market just like the rest of us.