In the world of homeownership, few things can deliver quite the unexpected jolt as a sudden increase in property taxes. You’ve budgeted carefully for your mortgage payments, insurance, and maintenance costs, but then an ominous letter arrives from the local tax assessor’s office, announcing a significant increase in your property taxes. How did this happen, and what can you do about it?
Understanding Property Tax Assessments
Property taxes are typically determined by two key factors: the assessed value of your property and the tax (or millage) rate set by your local government entities. If either of these numbers increases, so do your property taxes.
The assessed value is an estimate of what your property would sell for on the open market. This value can go up or down based on changes in the real estate market, improvements you’ve made to the property, or even clerical errors. The millage rate is a percentage of the assessed value, set annually by local government to fund essential services like schools, police, fire departments, and infrastructure.
The Shock of Higher Taxes
Increased property taxes can have a significant impact on your household budget. For homeowners with a mortgage, these taxes are often rolled into an escrow account, with the cost spread out over the year. When property taxes increase, not only will you owe more for the coming year, but you might also need to make up for a shortfall in the previous year’s escrow account, resulting in a sudden, unexpected increase in your monthly mortgage payment.
What Can You Do?
First, don’t panic. There are steps you can take if you believe your property tax assessment is too high:
- Review Your Assessment: Look over your assessment notice carefully. Ensure the information about your property is accurate, such as the size, number of rooms, and any special features. Mistakes happen, and if you find one, it could be the key to reducing your tax bill. Remember the tax assessor information is NOT always correct. They could be going off old information and data and they for certain do not do an in person inspection of your home to determine the overall condition and size of the home. Do not just accept what they have on file. Having the proper information is key.
- Compare With Neighbors: If you can access property tax records in your area, see how your home’s assessed value compares to similar properties in your neighborhood. If your home is assessed significantly higher than similar properties, it could provide a basis for an appeal. Remember this. Comparable sales MUST be prior to January 1st of the prior year. (Example. You are appealing your tax bill for 2023. You MUST use sales prior to January 1st 2023.
- Consider an Independent Appraisal: If you still believe your property value is overstated, consider hiring a professional appraiser to provide an independent valuation. While this will cost you upfront, it could save you a significant amount in property taxes in the long run. An independent appraiser will take the time to come to your home, measure it properly, look at the interior and exterior co diction of the home, take into account any deferred maintenance, updates as well as special features that could be a positive or a negative in the overall valuation of your home. The appraiser will then compare your home to other similar homes that are the same age, style, condition, quality as well as make adjustments for any material differences to determine your homes fair market value.
- File an Appeal: Most jurisdictions have a process in place to appeal property tax assessments. While the specifics vary, the process typically involves submitting a formal appeal and providing evidence (like an independent appraisal or comparable home values) to support your claim that the assessed value is too high.
The shock of higher property taxes can be unsettling, but remember, you have options. By understanding the process and taking proactive steps, you can ensure your property is assessed fairly and you’re not paying more than your fair share.
Remember, every homeowner’s situation is unique, and this post is intended to provide general guidance. Always consult with a tax professional or real estate appraiser in your local area for advice tailored to your specific circumstances. Remember, the tax assessor office is made up of real estate appraisers and professionals, therefore if you believe your home is overvalued, you should take the steps to ensure you have the correct information, data and support to have a successful appeal.
We at What’s It Worth Appraisal Services have helped many homeowners appeal their taxes successfully while also helping others understand that their taxes may be below the current fair market value.
In part 2 we discuss how a local Certified Appraiser can help you understand the process and get the correct information.