Property Tax Appeal: How to Tell Whether It Is Worth Your Time

Property Tax Appeal: Is It Worth Your Time?

Every year thousands of homeowners receive an assessment that is too high, and most never challenge it. An appeal costs little in many places, but it takes effort, so it helps to know the possible saving before you start. The Property Tax Appeal Savings Estimator gives that number.

Step 1: find the assessed value and the tax rate

Your assessment notice shows the assessed value, the date and the deadline to appeal. Your tax bill shows the amount you pay. Divide the yearly tax by the assessed value to get your effective tax rate, for example $5,670 on $420,000 is 1.35 percent.

Step 2: estimate the market value

Find three to six homes that sold in the last year, close to yours in location, size and age. Adjust for differences such as an extra bathroom or a smaller lot. The average adjusted price is a reasonable estimate of the market value. A recent appraisal is stronger evidence.

Step 3: the assessment ratio

In many counties the assessor values property at 100 percent of the market value. In others only a fraction is assessed, for example 40 percent. Enter the ratio your county uses, and the tool compares your assessment with market value times that ratio.

Step 4: read the result

The estimator shows the target assessed value, how far above it your assessment is, the reduction in value, the saving per year and per month, the costs you enter, the net benefit over the number of years the lower value will last, the expected value with your chance of winning and the number of years to recover the costs.

A worked example

A home is assessed at $420,000, and comparable sales suggest $375,000 at a 100 percent ratio. The over-assessment is $45,000, or 12 percent. At a 1.35 percent tax rate, the yearly saving is $607.50. If the lower value holds for three years, the saving is about $1,822. A $75 filing fee leaves a net benefit of $1,747, and with a 60 percent chance of winning the expected value is about $1,018. If a paid representative takes a third of the saving, add that in the cost box and compare.

When it is not worth it

If the difference between the assessed and market value is under about 5 percent, the possible saving is usually small and boards rarely change values by that little. If you would have to pay an appraiser $500 to save $100 a year, the break-even is five years. The tool warns about small gaps.

How to improve your chance

• Check the property record card for errors in square footage, bedrooms, bathrooms or lot size.
• Bring comparable sales and photos of defects the assessor cannot see.
• File before the deadline and follow the format your county requires.
• Be polite and specific at the hearing.

Limits

Rules, deadlines and the way boards decide differ by county, and a reassessment can also raise values elsewhere. The result is an estimate and not a prediction of any decision.

Quick questions

Can an appeal raise my assessment? In a few places the board can raise a value after an appeal; ask your county before you file.

Should I hire a company that takes a percentage? Compare their fee, often a share of the first year's savings, with what you can do yourself and enter it in the cost box.

Do I have to appeal every year? Only if your value is reassessed upward or the market falls; in many places a win lasts until the next reassessment.