Property Tax Assessments ... FAQ1 FAQ 2 FAQ 3
Are my assessments reliable?
First, we have to determine if you have a case at all, that is, if your home tax assessment is too high. The amount of your home tax assessment is what the town thinks your house and property are worth relative to other properties. This may or may not be an accurate figure. The National Taxpayers Union is credited as saying that as much as 60% of all property in America is over assessed.
Recently appraised properties are more accurate and closer to the dollar amount of current value than properties that have not been appraised recently. In other words, a recent estimate is closer to reality than an old estimate. Many taxpayers have the impression that their assessment is fair if it is below the current fair market value. However, what we really are looking for is equability. The fact is that property should be valued equitably with similar type property within the same taxing jurisdiction. If a taxpayer's property is assessed at 95% of fair market value and, in the rest of the jurisdiction, similar properties are assessed at 75% of fair market value, what's fair about that?
Most municipalities hire a company to do a "blanket assessment" since the tax assessor does not have the time to individually inspect each property. Part-timers, college students and, for the most part, nonprofessionals conduct the mass appraisal. Often old values are just rolled over without inspection. The time value allotted for each house inspection are minimal and mistakes are common. Because of a lean budget and/or negligence, distortion and error easily creep into the statistics. Any mistake on their part can cost you tens of thousands of dollars over time.
Why don't more people challenge their high property taxes?
Over 95% of people have no idea how to determine if they are being overcharged. The property taxing authorities do not want you to get curious about the value they place on your house and property. They do not have the time or manpower to establish accurate assessment figures and since less than one percent of the population appeal their taxes, why should they bother? Equalization or equal treatment is impossible and you have to check for overcharges yourself. One of the single, greatest savings at your disposal today is the potential savings on your property tax bill.
If my lender includes the property taxes in my mortgage payment and he overcharges me will I need a copy of my appraisal in order to challenge the over taxation through the Tax Assessor's office? Please advise!!!!
Your mortgage lender uses the property tax information forwarded from the tax assessor's office. Your mortgage lender will have to readjust their figures if your property taxes are reduced. Your property taxes are in the public record.
On the other hand, if you need to challenge your municipal property taxes, the real estate appraisal that your mortgage company has is outdated and of no avail. You need proof of valuation for the tax year you are challenging your taxes. This is a yearly date which the taxing authorities call the annual assessment date. This annual assessment date precedes your annual deadline filing date. The sale dates of the comparable properties you choose must precede this assessment date. If the annual assessment date is in October and your appeal is scheduled for August, you must have sales comparables dating before the October assessment date for the preceding year to be valid, otherwise your evidence will not be accepted.
Why does a home tax assessment change?
For years, assessments rose in line with soaring house and property prices. Property prices later leveled off or began dropping when mortgage interest rates shot up. Now in the 1999-2001, mortgage rates are the lowest in decades, and prices are holding steady or edging up. Labor markets are tight and economic demand for housing is steady.
Because of the changing housing market, assessments are changed every 6 to 12 years by municipalities through use of a mass or blanket appraisal. Some municipalities forgo the mass appraisal and simply roll over old assessments.
Unlike income taxes, where rules change from year to year, property tax calculations do not change and do involve the same methodology year after year. Appraising the value of your home is the basis for a house tax reduction. Purchase a book such as "Property Tax Appeals: How to Win Your Case" and apply the easy-to-learn principles and accepted appraisal practices.
How do I appeal my home tax assessment? Is it expensive? What do I have to prove?
Contact the municipal authorities or the local tax assessor for printed material on how to challenge your taxes. The fees to appeal your property taxes are minimal. If you do it yourself with our book as a coach, you'll save yourself the cost of an attorney and an appraiser. All you have to prove is that the assessment is unreasonable, excessive or discriminatory.
Why can't I just get a real estate company to give me a figure of what my house is worth?
Real estate professionals suffer from a bad reputation caused by a few bad agents and brokers. Real estate people often promised that they can get more money for your home than what a professional real estate appraiser says your house is worth just to get your business. And when it does not sell, they told some that the market was tight and that they had to lower their price. Or, another tactic of real estate unscrupulous agents is that they will hoodwink you and tell you that your house is worth less than it's true value and sell it immediately to someone in their "wings".
Because of a few bad apples, real estate agents and brokers have this stigma and their word is not accepted as reliable by the authorities. This is why it is prudent to get independent council from a licensed appraiser or from doing your own market analysis. Our book makes that bottom-line market analysis possible and cost effective.
Can my taxes go up if I lose?
Highly unlikely. I don't claim to have seen it all, but I've never seen or heard of it. If you have a case the burden of proof is on you, the appellant, to prove that the home tax assessment is in error. The system is not geared toward taking a vindictive stance if you lose. Maybe the system is vindictive in Iraq or China, but not here in the States, Australia, or England.
If I lose my property tax appeal, can I challenge again?
If by chance you lose your case, you can take the case to the next higher level. If you lose at the higher level, you can challenge the property tax appeal again the following year at the municipal level but you'll have to use new evidence. You can keep at it until you get it right. With our book you'll eliminate guesswork and save yourself time and doubts.
Food for thought: In a study of Rochester, NY (reported in 2001) these percentages were found:
Only 2% of homeowners, according to this study conducted by the Lincoln Institute of Land Policy, carried their appeal beyond the local assessor. Those that took the case to the local assessor won an average reduction of 8%.
Those that went further to the municipal tax court achieved an average reduction of 13% off their home tax assessment.
Those that went the distance to the New Your Supreme Court had 37% of their home tax assessment rolled back.
House property taxes in my community are too high and out of control. What can we do?
This is a political issue involving tax reform. You are not alone in your dismay over the lack of fairness and excesses of the property tax system. Effective information to appeal your property taxes is hard to come by. Without percentage caps on property taxes, politicians can promise tax cuts to get elected and may later raise taxes to new excesses to meet budget shortfalls. Getting involved in a state or local property tax reform group is probably the only way you can personally further a change. Here are a few battles that I've heard about lately:
= Nassau County, New York will finally reassess over 415,000 parcels of residential real estate by 2003 that have not been mass assessed since 1938. The current system is based on 1938 construction costs outdated by more than 60 years! Some get breaks while many pay an unequal higher share of taxes.
= There are towns in Virginia that have not been reassessed since 1949. Political pressure is building to be bring some reform and ensure better current home property tax equalization accountability.
= In Ontario Canada, property record card information, for up to 6 comparables, must be provided by the tax assessor if requested by the contesting property owner. Why is this service not provided by the tax assessing authorities in every town in the United States?
= In Alaska, legislation has been proposed limiting increases in assessments capped at 2% per year. More importantly, property taxes would be capped at 1% of assessed value forcing towns to stay within a budget limit.
= In Newark NJ tax reform legislation is proposed to change the fact that 23% of the property pays 100% of Newark's' tax burden. In other words, 77% of the property owned in Newark is property tax exempt!
= Montana enacted a law to cap property assessment increases at 2% annually for the next 50 years.
= California's landmark Proposition 13 in 1978 cut property taxes from 2.5% of market value to just 1% of market value. To put teeth into the law, it required a 2/3 legislative majority vote to increase state taxes. Pundits said California would plunge into financial doomsday. The opposite happened.
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Hi, can you tell me if you have any booklets designed for Canada? We are also on market value based assessments.
The approach to appraising a house's value, or the value of any other item being a new or used car, antiques, jewelry, etc. is based on the same principles. It involves comparing past sales and the attributes of that item in comparison to what your suff or subject item.
This principles and work sheets will work anywhere in the free world where there is a right to appeal.
Home Appraisals Basics: Determining House Values
The value of residential real estate is estimated by comparing the subject with similar properties that have been sold recently. We start by looking at our neighborhood to find comparable sales or properties in similar neighborhoods that share similar characteristics of lifestyles, income level of residents, surroundings, average age and home values.
Neighborhoods:
Compare apples to apples, oranges to oranges. Neighborhoods have boundaries and barriers to the best neighborhood which may signal an abrupt change in lifestyle i.e. railroad tracks, freeways, highways, major traffic arteries, lakes, rivers, mountains, etc. There are political boundaries created for government purposes, such as school districts, assessment districts, zoning districts and city limits. In your neighborhood analysis, you may consider recreational facilities common to your situation. The focus is to find comparable home value in similar neighborhoods for your home appraisal analysis.
Comparisons:
The best way for determining the price to set for a given property is to base that estimation on the fair market value comparison. The fair market value comparison approach uses the principle of substitution. That principle states that the maximum value of your house and property tends to be set by the sales price of an equivalent, equally desirable, similar substitute house and property, for a certain day in time.
In order to have valid home appraisal values, all you have to do is find 3 or more homes that sold recently having amenities and characteristics similar to yours. You'll only use the best three in your analysis.
Adjusting Comparable Home Values
Because properties are seldom alike, it will be necessary to make adjustments between the comparable properties as compared to the subject property (your property). This process equalizes the properties in the comparison. A good definition according to a leading appraiser, Ventolo and Williams, states that an adjustment is a "decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison to the subject property."
In other words, the comparable properties are adjusted to reflect the value of the subject property. You never adjust the subject (your own home). If two houses were identical in every way except that the subject (your house) had a deck and the comparable did not, the value of the comparable would be adjusted upward.
By this method, the subject (your house) reflects more value when compared to a comparable house with deficient items (such as no deck or no garage). Always remember: comparable sales must be adjusted and not the subject property. The Federal National Mortgage Association (FNMA) puts it this way: The subject property is the standard against which the comparable sales are evaluated and adjusted. Thus, if an item in the comparable property is superior to that in the subject property, a minus (-) adjustment is required to make that item equal to that in the subject property.
Conversely, if an item in the comparable property is inferior to that in the subject property, a plus (+) adjustment is required to make that item equal to that in the subject property. In other words, if a comparable sale property has a major improvement that your property does not have, make a minus adjustment. On the other hand, if you enjoy a major improvement and the comparative sale property does not, make a positive adjustment. Round off adjustments to the nearest $100. Our book contains hundreds of easy to use home value examples for your house tax reduction.
What do I do with the new property tax bill. Should I send it to my mortgage company.
It is the property owner's responsibility to forward property taxes to their mortgage company or bank for prompt payment.
