Property taxes create a constant source of financial demand on real estate owners. Those with mortgages pay extra every month to fund escrow accounts, and their mortgage lenders pay their annual income taxes. Those who inherited their homes, purchased with cash or who paid their mortgages off may have to save throughout the year to pay their property taxes.
The amount that individuals pay depends on what local authorities determine the property is worth. Local assessments estimate the value of real property and help ensure that everyone contributes fairly based on the value of individual properties. In some cases, homeowners may be able to appeal an assessment for real property and request a review of the assessed value.
What circumstances may warrant a property tax appeal?
1. Devaluation
In some cases, property owners who are familiar with the interior condition of a residence know details that local authorities do not. There could be significant structural issues, such as foundation problems, that drastically reduce what the property is worth. While there may be plans to address those issues eventually, the property may have a current fair market value well below the assessed value estimated based on external appearance and current markets.
2. Unequal treatment
Generally speaking, assessments are only a portion of the actual fair market value for the property. The assessed value reported by the state is substantially lower than the potential sale price of the home or parcel if the current owner lists it for sale on the open market. When property owners can show that their assessed value represents a higher percentage of the fair market value of the home than the assessed value for their neighbors, they may have reason to appeal on the basis of unequal treatment.
3. Assessment errors
The professionals assessing a property often do a cursory review of the property’s features. In some cases, the details that they use to assess the property are actually inaccurate. They may have the wrong number of bathrooms or bedrooms listed. The authorities might overestimate the square footage of the home or the acreage of the parcel on which it sits. In such cases, the assessed value could be wildly inaccurate because of the misinformation about the property.
Initiating a property tax appeal can lead to a more reasonable assessment and a more appropriate final property tax bill. Homeowners who successfully appeal assessments in a timely fashion can avoid scenarios in which they end up overwhelmed by unfairly high property tax assessments.