Should You Appeal Your Property Taxes in 2023?

You might have difficulty this year if you decide to file an appeal -- but that doesn't mean it's not worth trying.

In some parts of the country, property taxes are higher than others. Recent Motley Fool research, for example, found that New Jersey has the highest property taxes in the nation, with the median tax bill coming in at over $7,400. 

But property taxes can still be a major burden even in states where the median or average bill is considerably lower. And if your property taxes have gone up a lot this year, you may be considering filing an appeal.

But is that worth doing in 2023? It may be, if you have a strong argument. This year, however, it may be harder to fight a property tax bill for one big reason.

How property tax appeals work

When you appeal your property taxes, what you're really doing is arguing against your property assessment. See, your tax bill is calculated by taking the effective tax rate where you live and multiplying that by your home's assessed value. So let's say that rate is 2%, and your home is assessed at $500,000. That would leave you with a property tax bill of $10,000.

In this situation, you can't appeal that 2% local tax rate. But you can argue that your home is worth less than $500,000. And if you're able to prove that your home's value should only be assessed at $450,000, that should knock your tax bill down to $9,000. The result? A cool $1,000 in savings that you can use for other things -- like maintaining your home or paying your mortgage. 

Why it's a tough year to appeal your property tax bill

To win a property tax appeal, you need to prove your home has been assigned too high an assessed value. That may be easy to do if you can pull up data from recent sales in your neighborhood of homes that are comparable to yours and show that those sold for less than the amount of your assessment. Going back to our example, if your home is assessed for $500,000, but there are five similar homes within a half-mile radius that sold within the past few months for just $450,000, you can make the case that your home, too, is only worth $450,000.

But right now, property values are still up on a national level. And also, over the past year, housing inventory has been low, which means a lot of buyers were forced to duke it out in bidding wars, thereby leading to higher prices. So you might struggle this year to find comparable homes that recently sold for a lower price than your assessment. And if you can't prove that your home has been overassessed, you're not going to win your appeal.

Plus, while the process of appealing property taxes varies depending on where you live, in some cases, you might have to take time off of work to argue your case in a local courthouse. And you might have to pay a larger fee to file an appeal. In New Jersey, for example, you might pay up to $150 to appeal your property tax bill, depending on the assessed value of your home. 

Now, this isn't to say you shouldn't file a property tax appeal if you have the data to back up your argument. But before you spin your wheels trying to find that data, you may want to consider saving yourself the work and aggravation of filing a property tax appeal this year -- especially if you can reasonably afford your bill. 

What’s more, it's probably not worth your time to file a property tax appeal unless you're arguing down a large sum. Getting your assessment knocked down from $500,000 to $450,000 could have a big impact on your property tax bill. But working hard to lower your assessment from $500,000 to just $490,000 may not be worth your time and effort. Even in the case of a 2% tax rate, you're looking at saving $200. Given that you might spend a chunk of that on a filing fee itself, the financial upside may be quite limited.