Should You Appeal Your Property Taxes?

You don’t have to resign yourself to the property tax bill you’re presented with. Here’s when it pays to file an appeal.

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Property taxes have a tendency to rise over time. If your property tax bill keeps going up, your finances could keep taking a beating year after year.

Fortunately, you don't have to resign yourself to an outrageous property tax bill. Rather, you can appeal your property taxes, and if you're successful, you'll start paying your local township or city less money for the privilege of owning your home. 

That said, the appeals process can be a cumbersome one, so before you go through the motions, it pays to evaluate your circumstances to see whether it makes sense. Here are a couple of key questions to ask yourself that will help you determine whether to move forward with a property tax appeal, or to accept your bill for what it is. 

1. Is my property really overassessed (and can I prove it)?

Your property tax bill is calculated by taking the assessed value of your home and multiplying it by the tax rate assigned to your city or town. That rate is something you can't negotiate. But if you feel that your home has been assigned too high a value, you can fight to get that figure reduced, thereby slashing your property tax bill in the process.

Each year, your city or town is required to send you an assessment notice. That notice may come on its own, or it may be part of your property tax bill. You then have the right to argue that the assessment you've received is incorrect by filing an appeal -- but you'll need to prove that that number is off.

You can do that in a couple of ways. First, take a look at the criteria your assessor is using to determine your home's value, and make sure it's accurate. You can do so by visiting your local assessor's office and asking for a copy of your property record. That record will contain details about your home -- things like number of bedrooms, square footage, and features, like whether or not you have a swimming pool. If the information contained in that record is wrong -- say, your home is listed as having a two-car garage when there's only a one-car garage, or your basement is listed as finished when it isn't -- then you can use those errors to argue that your property has been overassessed. 

Another way to prove your point is to look at comparable homes that recently sold in your neighborhood. If three properties within a five-block radius were sold for $250,000 - $260,000, and your very similar home is assessed at $300,000, you can use that data to argue that the value assigned to your home is too high. 

However, if you can't prove that your home is overassessed, then there's really no sense in filing a property tax appeal. 

2. What costs will I incur to file my appeal?

The amount you'll pay to file a property tax appeal will depend on where you live and the value of your home. In some cities or towns, you can file an appeal for as little as $10 to $25. In other areas, you'll pay much more. Also, you might pay a surcharge if your home value exceeds a certain amount.

But it's not just filing fees you need to consider. While some appeals are settled by mail, other towns or cities require you to attend a hearing to argue your appeal in front of a judge. If that's the case where you live, filing that appeal could mean losing a day of work -- and a day of income. 

Therefore, compare the cost of filing your appeal to what you stand to save on property taxes. If your local tax rate is 2%, and you're arguing that your home is overassessed by $50,000, that's $1,000 in potential savings if your appeal is successful. But if you're arguing a $10,000 overassessment, that's only $200 in savings if you win. If you earn that much money, or more, per day, then an appeal may not be worth the hassle. 

Appealing your property taxes could lower your homeownership costs substantially, but before you go that route, make sure it’s worth your time and that you’re likely to be successful. Of course, rest assured that if you don’t win your appeal, the worst that happens is that your tax bill stays the same -- it can’t go up. That said, just because you appeal your taxes one year doesn’t mean they can’t increase the following year, whether because your tax rate itself goes up or because your property is reassessed. Therefore, while it often pays to file a property tax appeal, know that it’s a process you may need to deal with more than once. 

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