Property taxes can be expensive, but doing this can sometimes lower your bills.
When my husband and I moved into our home, our property taxes were substantial. We were quite surprised to receive our first bill and see that our annual tax bill was almost as much as our mortgage payments. This came as a shock in large part because we built a new home -- we didn't have tax history for the property to prepare us.
The good news? One simple move reduced our property taxes. And no, we didn't have to relocate to a different house. Here's what we did.
This approach has saved us thousands in property taxes
After paying high taxes our first year in our house, we looked for ways we might lower them.
The amount you pay in property taxes is determined by two things: The tax rates where you live, and the value of your home as assessed by the city or county. The more your locality decides your house is worth, the higher your tax bill will be. Our research revealed that we could formally appeal our tax assessment.
It also revealed that the assessed value of our property was higher than it should be -- thus, our tax bill was inflated. So we submitted an appeal. Just about anyone can do this, no matter where you live -- although the process for challenging your property's value can vary.
In our township, once we submitted the appeal, we had to provide evidence to the appeals board to show them why we thought our appraised value wasn't right. There are usually several ways to make this argument. They often include showing that properties similar to yours sold for less than your assessed value, and hiring an appraiser to estimate the value of your home.
Our property is unusual, so we decided that hiring an appraiser would be the best route. This cost us around $250. The appraiser wrote up a report estimating a lower value for our home -- well below what the county's assessment was. Our township accepted our evidence and lowered our home's value for tax purposes.
We reduced our tax bill substantially using this approach. And while taxes do go up a little bit in most years, since our home has retained its lower appraised value over time, we've paid thousands of dollars less in total taxes over the years.
Can you save on property taxes by appealing your assessed value?
The steps we took to appeal our property tax assessment were easy. And most local governments allow homeowners to argue that they are taxed too much because their home isn't worth as much as the government thinks it is.
If you're considering this move, look into your local rules to find out about the appeal process where you live. Some people hire lawyers to help, but you may not need to depending on the complexity of the process in your town.
However, this approach works only if you have reason to believe your home's value is lower than what your county or town estimated. Since property values have risen in many parts of the country recently, that may not necessarily be the case right now. And while it's very uncommon, there's a chance your county could decide your assessment is actually too low -- and raise your taxes. So start with your appraisal or comps, and if they show that your home assessment is low, simply don't risk an appeal.
Still, it's possible your area hasn't seen much price appreciation, or you may have other reasons to believe your tax assessment is higher than it should be. If that's the case, find out about the appeals process and get started as soon as you can. With luck, you, too, may save on the taxes you owe.
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