When you own a home, you will be tasked with paying property taxes annually. These taxes are based on the value of your property, which means that they can change every year. If the value of your property drops, you will pay less in property taxes. An increase in the value of your home indicates that your property taxes will be higher for the year.
In order to determine what your property taxes will be for the upcoming year, a property assessment will take place. This assessment is designed to identify the fair market value for your home. The taxes that you pay will then be calculated based off of this assessment. The national average for property tax rates is just above 1.00 percent. However, the rate that you pay can differ depending on where you live.
If you feel like you’re paying too much in property taxes or believe that the overall value of your home is lower than the assessed value, it’s possible to file a tax grievance. Before this filing can be processed, information about your property will be gathered to determine if you’re allowed to file a grievance. Another assessment will then take place. If the property was overvalued or the taxes that you’re paying are deemed to be too high, your taxes can be effectively reduced.
Property assessments are performed by a tax assessor who works for the county that your home is situated in. When you file a grievance, the assessment will instead be performed by an independent tax grievance company. If you feel like your property taxes are too high, filing a tax grievance is a relatively straightforward process.
This article takes a closer look at what this process entails and how you can benefit from it.
How Are Property Taxes Assessed?
There are three separate methods that can be used for property assessments. The first step in the property assessment process involves identifying the actual market value of the property. The tax assessor will need to familiarize themselves with the surrounding community to determine what the value of your property should be. If the surrounding real estate market has recently experienced a downturn in home values and popularity among prospective homeowners, it’s possible that your home is overvalued, which would result in the value of your home decreasing.
Market trends can dictate the overall value of your property when a tax assessment occurs, which means that you should have a good idea about how your property taxes will change each year if you pay attention to trends in the local real estate market.
Three Methods To Assess the Value of a Home
The three primary methods that are used to assess the value of a home include the cost method, the market method, and the income method. The market method will compare your property to similar properties in the surrounding area to determine what the value of your home should be. As for the cost method, the tax assessor will focus on how much it would cost to replace portions of your property, which can be reached by looking at the current material costs as well as labor costs. The income method involves the assessor identifying how much income would be gained by renting out the property in question. This particular approach takes numerous factors into account, which include:
- Expected income
- Current insurance
- Operating expenses
- Financing terms
- Costs associated with maintaining the property
Once the market value for the property has been estimated, the assessment will then be calculated to effectively determine how much taxes you owe. It’s important to understand that the property taxes that are collected by the local government are highly beneficial to the surrounding community. Once collected, these taxes are oftentimes used for the funding of local law enforcement services, water/sewage services, and schools. In many smaller towns and cities, the collection of these taxes is essential.
One of the top reasons for a tax grievance to be filed is when an over-assessment occurs. There are several reasons why over-assessments can occur, which include:
- Assessment records are outdated
- The wrong information is provided within the assessment, which could involve the size of the property or the property type
- The conditional rating that the assessor attaches to the property is incorrect and doesn’t match the actual condition of your home
It’s also possible for an over-assessment to occur when the value of a property changes but the assessment doesn’t reflect these changes. No matter the reason, it’s important to file a tax-grievance petition if you want to lower the taxes that you pay on your property every year.
Understanding Tax Grievances
Tax grievances are considered to be formal complaints that are filed against the current tax assessment on a property. While you can file a tax grievance on your own, it’s highly recommended that you retain the assistance of a tax grievance consultant. Without a consultant by your side, another assessment would not be able to be performed on your property. Even if your initial petition is denied by the county that you live in, separate petitions can be filed on a yearly basis to account for the new tax assessments on your property.
When you want to file a formal complaint, the tax grievance company that you hire will be able to perform a new assessment. If this company finds that your home has been overvalued or that the taxes you’re paying are higher than they should be, they will start the tax-reduction process. It’s possible that the tax grievance company won’t be able to find an over-assessment with your property, which will result in you receiving a letter that states that a tax grievance case can’t be made. It may be more difficult for the company in question to identify that you’re paying too much in property taxes if many of the properties surrounding your home have also received incorrect assessments.
When you’re hiring a company to assist you in filing a tax grievance, it’s important that you make the right hire. While different companies have different fee structures, the most reputable companies will have a no-fee policy, which means that you only make payments in the event that your property taxes are lowered. If your taxes are effectively reduced, your fee will likely be around 50 percent of the total reduction amount. Let’s say that your yearly property taxes are reduced by $1,500. Once this reduction occurs, your fee for the tax grievance company would be $750.
Keep in mind that there aren’t any risks associated with filing a grievance. Even if the new assessment finds that your property should actually be valued at a higher price than it currently is, your property taxes can’t be increased. A reduction in property taxes won’t have an adverse affect on any tax exemptions on your home, which means that there’s no downside to going forward with a tax grievance.
Filing a Tax Grievance (Step by Step)
While the process can differ somewhat from county to county, the general steps for filing a tax grievance remain the same. Filing a tax grievance involves:
- Filing a petition with the local Board of Assessment Review
- You may receive a denial after you file your petition, which can take around 2-3 months
- Upon receiving a denial, file an appeal with the state Supreme Court within 30 days
- Your appeal will then need to be filed with the town assessor or local treasurer within 10 days
- At this point, you will be given a court date, which will be anywhere from 4-18 months in the future
- When the court date arrives, you can present your case in court and await the results
The tax grievance company that you hire should assist you throughout this process.
Completing a Tax Grievance If You Are Selling Your Home
In the event that you’re selling your home in the near future, you should still consider filing a tax grievance. Even though this process can take a long time to be completed, having lower taxes for your home will make the property more appealing to potential buyers. The majority of prospective homeowners will take property taxes into account when calculating their monthly mortgage payments. In the event that your property taxes are considerably higher than similar properties in the surrounding area, buyers will choose to look elsewhere. Having competitive taxes will invariably increase the appeal that your home has when compared to other homes that are on the market.
Final Thoughts on Property Tax Grievances
Property taxes can make up a significant amount of your monthly mortgage payments, which is why it’s in your best interest to reduce these taxes if possible. It’s also important to understand that high property taxes will cause potential buyers of your home to consider other options in the event that you place your property on the market. Before you file a tax grievance to have your property taxes lowered, make sure that you hire a reputable tax grievance company that has handled many cases like yours.
While this process can take time to be completed, obtaining assistance from tax grievance professionals can reduce the possibility of time-consuming delays in the process. There’s also no risk involved with filing a tax grievance. Even if the petition is unsuccessful, your property taxes will remain the same.