Tuesday, May 08, 2007

Real Estate Decline? - Reduce One's Property Tax

One outcome of the real estate bubble is that property value assessments and the resulting property taxes have been rising. However, with prices cooling and sometimes regressing, the assessed value of the property may actually be higher than what one could get from selling the house. In such cases, the homeowner may be able to get the property value assessment lowered.

Homeowners Wage a Rebellion as Property-Tax Assessments Rise by the Wall Street Journal describes the steps taken by some homeowners to revise the higher property value assessment.

  • Contest assessments during the open challenge period. My county has a short period after assessments where homeowners may easily submit requests for revisions. After the open challenge period, homeowners need to go through the longer formal process to contest the assessment.

  • Make sure assessment data is correct. Appraisals sometimes are based on guidelines such as neighborhood, square footage, number of bedrooms and additions. Correcting errors which show better or higher than actual values can reduce one's assessment.

  • Get quantitative data to support one's case. Have comparable sales data or a paid appraisal from a reputable appraiser to support your case of a lower market value. Data from the same size houses with similar features in the same or similar neighborhoods are most useful.

  • I did all of these steps during our county's latest reappraisal of home values. Unfortunately, we had recently purchased our house and the purchase price since the previous assessment superseded any data I presented. Fortunately, we live in an area which did not experience a housing bubble and our home has appreciated about 15% from what we paid, according to Zillow.com.

    For more on Ideas You Can Use , check back every Tuesday for a new segment.

    Photo Credit: morgueFile.com, Tony Roberts

    This is not financial or tax advice. Please consult a professional advisor.

    Copyright © 2007 Achievement Catalyst, LLC


    Anonymous said...

    Very interesting. Nice post.
    FSBO Louisville

    Anonymous said...

    In my county, the property tax is determined by the property value assessment and a factor ranging between 0.5 and 1.5. So this year 2007, we will pay more property tax even the assessment is lower than last year. That's because they changed the factor from 0.85 to 0.97. This is in the control of the county government. -goldfish

    Super Saver said...


    Ouch, especially if the county can increase the factor without a vote.

    Anonymous said...

    Good idea to save some as home values drop.