Here where I live in New Jersey, we have the highest real estate taxes in the United States (and probably the universe as well!) with a whopping average of $3,971 per year. Now that we're closing in on a new fiscal year in my town, and my first quarterly tax payment is due on August 1st, I am reminded again that many of us simply accept the tax evaluations we receive from our local assessor and pay up without really knowing what can be done. In fact, if there has been some kind of error made or even if you just need a further explanation as to how the assessment was calculated, there's a lot you can do.
It matters not whether you pay your taxes through an escrow account (which I don't recommend if you have that choice) or you do as I do and pay them directly to your local office, you still have the right to challenge your assessment and you may in fact have good reasons to do exactly that!
About 20-40% of all property assessment challenges are successful and may lead to long-term savings. Click to tweet
Here's what you should know to challenge your property tax assessment:
Know your local rules for appeals
Even before you receive your new annual tax assessment, check with your tax assessor's office or website for the complete rules and forms you may need. In most cases, you have 90 days from the receipt of the assessment to appeal, but in some places it can be as short as 30 days to file.
Don't assume anything!
If your assessed value seems lower than what you think your home is worth on the local market, don't feel too smug. It may be that the rules where you live allow for assessments to be calculated at less than 100% values (like 80% for example) and that your taxes may still be too high because of the tax rate itself. Check and see if it has been adjusted to a less than 100% of value calculation.
Also, before you file any appraisals or other evidence, be sure you're not going to inadvertently raise your assessment. Some assessors' offices promise not to raise your assessment as a result of a review, but not all do.
Look for special adjustments or obtain them if you qualify
In most areas, seniors, veterans, the disabled, and low income earners will qualify for adjustments or “freezes” in their taxes. Find out if you meet eligibility requirements and obtain all forms and applications to get those credits, which can be substantial. If you have already filed for adjustments, make sure they have all been applied properly.
It's not being nosy
Check at the tax office yourself to compare similar homes in your neighborhood to see what the tax assessments are there. If similar properties have vastly different assessments from yours, it will be a red flag for you. There may be a really obvious mistake like your home is listed as having 5 bedrooms instead of 4, or a miscalculation on the square footage. Those kinds of errors are common and can be fixed. Knowing about them makes it easy to fight.
Get the paperwork you need
Besides the simple application needed to appeal, you may also need blueprints of your home, photographs, repair estimates, and/or a recent history of homes sold and the market value of your home. If you can demonstrate that your home's value is lessened by some unique situation like poor grading which prevents your lawn from growing properly or your basement floods due to poor drainage, it may decrease your home's value and subsequently your tax bill, but you'll need some evidence.
Once you present your case, which the tax office will schedule, you should get a decision in about 2-3 months. If you lose the decision, you can appeal and provide more information and/or get professional assistance if you need it.
Know when you need professional help
It's not always necessary to get paid help if there is an obvious error that you can demonstrate to the tax assessor's satisfaction. However, you will need a professional real estate appraiser to file a report if that's the issue are you challenging (which can cost $250 and up). Check online with certified real estate appraisal sites to get a legitimate quote and recent sales in your area. There are also law firms that can assist you. They will not only charge you some fees, but will probably ask for a percentage of the tax adjustment savings, which can be substantial. Use these outside providers only if you cannot handle the challenge on your own.
Remember, if you never ask about your tax bill, you'll never save on it. And by successfully challenging your assessment this year, you'll set the stage for a lower assessment in years to come, potentially saving you thousands of dollars during the time you own the home.
Have you ever challenged your property tax assessment? What was your outcome?
Image courtesy of ddpavumba at freedigitalphotos.net (with changes)