If you are a homeowner, you’ll be getting your new property tax assessments soon. Most of you should see a lower market valuation and tax bill. If it’s not low enough, fight it by filing a tax appeal. Here are some tips to winning a tax appeal using a real estate broker.
An experienced local real estate broker has the best data on recent home sales and current listings, as well as the market knowledge to interpret that data to win a real estate tax appeal and reduce your property taxes. They are qualified to evaluate the tax man’s comparables, the most important ingredient in the tax assessment, and distinguish your home from them.
Tax assessments are created by local tax assessors to calculate your property taxes based on your home’s current market value. There’s one big problem……
Public tax assessors do not visit your home to value it. They don’t even do a drive-by. And they have less information than the MLS– sometimes only beds, baths, square footage. Besides being incomplete, the data may be inaccurate. In determining your home’s market value, the tax assessor usually just looks at recent sales in your area and comes up with a number, often based on the highest sale. Don’t fret. You can fight City Hall, if you know how.
How to Beat the Tax Man
The key to winning a tax assessment appeal is accurate data– recent sales & current listings of appropriate comparables– and the ability to argue, with proof, that your home is distinguishable from the homes used by the tax assessor to set your home’s value.
Armed with MLS data, your broker has inside information the tax man doesn’t. This valuable information and the expertise to evaluate different property characteristics to distinguish them for market value purposes is what an experienced real estate broker or agent brings to the tax assessment table. In those jurisdictions that allow it, an appraiser can also provide admissible evidence of market value.
[TIP: You don't ever want to use a zestimate or other computer-generated valuation as evidence at a tax appeal hearing. Zillow, like the tax man, does not visit your home or inspect it to create a zestimate. Thus, zestimates are fatally flawed and will never win you a reduction in a property tax appeal.]
What are your chances? According to the National Taxpayers Union, your chances of getting a lower tax bill are about 1 in 3.
A few pointers when apealing your tax assessment:
- Ask to see a written notice of your appeal rights. Read them carefully.
- File your appeal promptly (use certified mail RRR), according to the instructions. Make a copy for your records.
- Ask for an “in person” appeal. It’s much better than just sending in paperwork.
- Ask the assessor for the information used to calculate your assessment, including all comps and data on your home — remember, the public data may be wrong, incomplete or stale.
- Get your local broker to gather evidence to dispute the market value– recent sales and current list prices of appropriate comps– and put it in a written report, very much like a CMA report. Ask if they will attend the hearing as your witness.
- Document (with photos) your property’s condition. Don’t forget the unzillowables, like the sewer drainage pipe next to your shore house or the steep (useless) lot you’re on, as opposed to your neighbors flat one. Remember, not having seen or inspected your home, the tax assessor is unaware of the factors which adversely affect your home’s value.
- Hire an appraiser if you are allowed (some jurisdictions forbid it)
- If you own a condominium unit, get the tax assessments for the other units in the building (some states, like Maryland, have this information online). Taxes can also be challenged if they are not uniformly applied. I successfully challenged a condo assessment because 2 bedroom units on higher floors were taxed higher, while similarly located 1 and 3 bedroom units were not.
Tips For Brokers:
- market your services in December and January to homeowners looking to contest their property tax bills
- offer your services to condominium Boards for the owners
- advertise on Craigslist.org.
- learn the appeal process by calling local tax lawyers or colleagues that may have handled tax appeals. Get a few property tax appeals under your belt and you’ll become an expert, adding to your arsenal of skills which set you apart from the competition.
