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Property Tax Relief
Do You Have a Property Tax Appeal Case?
How do you find out if you really have a case? I.e. that your currently over assessed and paying more than you fair share of real estate taxes? That's what we attempt to help you answer here.
In essence, in order for you to figure out if you have a case, you'll have to first establish what you think the market value of your property is and what your city thinks it is. If there is a discrepancy between the two i.e. that your property is in really worth less than what the city is claiming, than you have a case. Yes that is a simplified answer, but that's what this is really all about.
Keep in mind that it is widely reported that 60 -70% of all owners are over assessed so as property values decline, chances are really good that you do have a case. And if you do, and if you can establish that you have been over paying, you can get a refund in most states as well.
Property Tax Relief - Assessed Value
You need to figure out exactly what both values are - your opinion, as well as your cities. As far as the cities assessment, you should look at your last property tax statement, sometimes called your Notice of Assessment. It may be called something else but its the one that is mailed to you. If you can't find it in your files you should be able to go to your cities assessors department and they'll be able to provide it for you.
In general, the Notice of Assessment tends to get a little tricky to figure out (Whether they do it on purpose or not is up for debate). For example, here in Michigan they report the Taxable Value, Assessed Value, Tentative Equalization Factor and the Current State Equalized Value on the Notice of Assessment. But, they don't actually just list their opinion of what your property is worth. It's not clear at all.
The assessed value is normally the cities opinion of your properties market value divided by their assessment ratio. Or more simply put, they take the actual market value and multiple it by the assessment ratio (maybe called sales ratio in your area) to come up with the assessed value. In my town, the assessment ratio is 50%.
So, if your property is really worth $1,000,000 and the assessment ratio is 50% than your assessed value would be $500,000. Or if you're looking at your Notice of Assessment, take the assessed value and divide that by the ratio and you will come up with their opinion of your properties value.
Keep in mind that the assessment ratio varies not just between states but from one city to the next. You can find out the assessment ratio by calling your city or looking it up online.
Property Tax Relief - Real Market Value
There are several different ways to determine the real market value of your property. However the most relevant is by comparing your property to other similar properties that have recently sold. This is really all about COMPS or comparable recent sales and has everything to do with the world of appraising properties.
Lets look again at the $1,000,000 example above. And say that the $1,000,000 is the market value the city has has placed on your property. But you know that three other properties have sold within a half mile ratio, all of similar square feet, lot size, general conditions, etc. within the last 4 months; but they sold for $700,000 (thats a 30% decline in value, which is currently a common decline in many markets).
Your property in this example is over assessed by $300,000. The millage rate in my town, for both summer and winter real estate tax is 46 mills. The millage rate is what you multiple the assessed value to figure out what you actually pay in real estate taxes. Assessed value x millage rate = annual property taxes.
Keep in mind we have to apply the 50% assessment ratio to the $300,000 difference. So the potential saving would be on $150,000, which would be:
$150,000 x .046 (this is the millage rate) = $6,900 per year... year after year. And keep in mind you should be able to get a cash refund if you can demonstrate that you have over paid in the previous years.
If you believe you do have a case, we encourage you to take some time and be prepared when you present your appeal. You still need to learn a lot about debating comps, knowing the technicalities of the process, avoiding common mistakes, trying to get your appeal settled BEFORE you go to a council meeting, etc. Most people stroll into the assessors office with a weak presentation and get denied due to lack of preparation and or weak comps.
Remember your city does not want to give away their tax base...
We want to help you win your appeal, fill out the tax appeal form for meaningful answers.
Click here to see ways to reduce property taxes.
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