Lower Your Property-Tax Bill
Save more on your bill this year
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If you anticipate a silver lining in the black cloud of
declining home prices -- in the form of lower property-tax bills --
you may be disappointed. The National Taxpayers Union figures that
as much as 60% of taxable property in the U.S. is overassessed,
largely because assessment cycles haven't caught up with the
decline in home values.
In California, for example, a home's assessed value is based on
its purchase price, plus increases of up to 2% annually. The house
isn't revalued until it's sold again. To capture the price plunge
of the past few years, homeowners must file an appeal and prove
that their home's assessed value exceeds its market value. In San
Diego County, the assessor's office processed 80,000 appeals in
2008; the average reduction in assessed value so far is $110,000,
equivalent to a tax cut of $1,200.
Many jurisdictions calculate a home's assessed value as a
fraction of its market value, so do the math to make sure your home
is priced fairly. Also verify that you have received any breaks
you're entitled to, such as a homestead exemption or a reduction
for seniors or veterans.
How to appeal. Go to the assessor's Web site or office to
double-check the "property card" and any working papers for your
home. Are the figures for square footage and number of bedrooms and
bathrooms correct? Has the assessor accounted for any features that
could detract from your home's value, such as an irregularly sized
lot or a carport instead of a garage? Pull the property cards for
five or ten neighboring homes that are similar in terms of age,
style and features. If the assessments on similar properties are a
lot lower -- 10% or more -- you have a good case based on
uniformity.
Otherwise, if you believe your home's assessed value exceeds its
market value, you'll have to provide sales-price data for several
comparable homes. You can get that information from a real estate
agent, or check the local public library or your county assessor's
or county clerk's office. Ask the assessor whether a recent
appraisal for, say, a refinancing is acceptable proof of your
home's market value.
Two chances. Read your assessment letter for details on
how to appeal. You'll probably have two windows of opportunity:
During the first, you may request a reduction in the assessed value
of your home for the forthcoming tax bill. During the second, you
may appeal for a retroactive reduction and refund.
Until your appeal is resolved, pay your tax bill in full to
avoid incurring penalties and a lien against your home. As a last
resort, you could go to court, but that's an expensive process
usually best suited for commercial property owners with more at
stake.
You may see advertisements for companies that will help you
appeal your assessment, often in exchange for about half of any
savings on your tax bill. But with the right preparation, you can
probably do just as well yourself using a guide such as How to
Fight Property Taxes ($6.95), from the National Taxpayers Union.
The NTU's Web site also has links to state and local taxpayer
associations that may offer further insight into the appeals
process..
SunTrust is unable to offer tax or legal advice. Please consult with your tax and legal advisors.
© All contents copyright 2009 The Kiplinger Washington Editors
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