A Primer on Real Estate Tax Appeals

When your property taxes are assessed, the tax assessor estimates your property’s market value based on comps, depreciation/appreciation and income generated by the property (when relevant). Next, the assessor will factor in any limitations that could impact how much of your property’s value can be taxed. Once the assessor comes to a final value, that value is submitted to the city and taxes are assessed on the property. Based on the value of the property, a millage rate will be used to determine the amount of taxes that you owe. For example, if the millage rate is 20, then property owners will pay 20 dollars for every thousand dollars for which their property is assessed. If your property is worth $100,000, then the property taxes on that property would be 20 x 100, or $2,000.

When a property owner wishes to protest their property taxes, it is important that the owner understand exactly what they are protesting. Misconceptions can lead to errors in process, which render the dispute void. As a property owner, you cannot dispute your tax bill. The bill is not up for debate because the millage rate is not up for discussion. However, you can dispute your tax assessment, which is the value that the local government places on your home and uses to determine how much you owe in property taxes.

The first step in the process is to have your property reassessed. At this point, a formal grievance is not necessary as you are simply having your assessment updated, which is your right. However, if after the reassessment you believe the value set on your property is still higher than the actual value of the property itself, then you can file a formal grievance. This grievance will be filed with the appropriate Board of Assessment Review, and you must make sure to file it timely (all states and municipalities are different) to insure that your case is heard. Should your grievance be denied at this level, you will need to file a claim against the town with the appropriate state court.

The key to winning a property tax dispute is to prove that the property in question was assessed unfairly. You must show that your property is simply not worth what the tax assessor has assessed it to be. Assessors work on market value, which the amount of money that you could reasonably expect your house to sell for on the market in its present condition. If you can show that the comps for your house in your area are significantly lower than your property’s appraised value, then you may have a case.

As you are likely aware, this article is simply intended to educate and inform. Every person’s situation and every property are different, so you should definitely seek professional advice before beginning your own property tax dispute. With so many cities raising property taxes to compensate for falling property values, it may be that your local government has not actually assessed your property incorrectly, but is simply charging a higher millage rate to accommodate falling property values. In this case, a lawsuit or dispute will not necessarily help you because their market value assessment could, indeed, be correct.