Death and taxes. Benjamin Franklin espoused their certainty, but it’s doubtful even he knew how difficult it would be to avoid the latter – especially property taxes.
No matter where you live in the United States, if you own real estate, you must pay property taxes. According to a recent study by Zillow, a U.S. property owner pays an average of around $2,800, or approximately 1.4 percent of their home’s value each year in property taxes. Of course, that “average” figure indicates some homeowners pay more while others pay less. The counties with the highest averages are Westchester County, NY ($14,829 per year); Essex County, NY ($12,051 per year) and Bergen County, NJ ($11,172 per year).
Do you know how much you pay in property taxes?
Deciphering how property tax rates are set is not easy. There is no single formula used by states and counties to calculate property taxes. In fact, more than 13,500 local governments have the authority to assess property taxes; all states allow local governments to set their own tax rates even though many states place limits on their rates.
Still, understanding the process is your first step toward knowing whether or not you’re paying too much in property taxes. Start by visiting your local assessor’s office to find out how they assess properties. Ask how you might go about appealing your assessment. Most municipalities require property owners to lodge their appeal within 60 days of when annual assessments are mailed; check with local authorities for details regarding your city or county and get copies of the forms you’ll need to complete. Homeowners cannot contest their property tax rates, but they may be able to lower the assessed value of their home by filing an appeal.
Once you have a basic understanding of the assessment process, you’ll want to do your due diligence to determine whether you’re being overtaxed:
Get your property card from your local assessor’s office; in some municipalities, these documents can be accessed online. Your property card – also known as a property’s “working papers” or “worksheet” – includes factors used to determine your home’s assessed value: square footage, lot size, number of bedrooms and bathrooms, etc. If, for example, the assessor’s office believes your home includes a three-car garage but no such feature exists, it’s likely your assessment is incorrect.
Know your neighborhood
Most cities and counties assess homes on a one- to three-year cycle. It’s natural, then, that a home’s assessed value will fail to keep up with changes in local real estate prices. A local decline in home prices could leave you paying more than your fair share of property taxes.
When determining whether your home has been properly assessed, you’ll need to know the assessment of comparable homes – same size, same location, same amenities. Using information available from your assessor or on Zillow, search for at least five comparable homes that have sold in your neighborhood within the past year. If you discover that your home is valued at least 5 percent to 10 percent higher than comparable properties, you may be able to file a successful appeal.
Present your case
The National Taxpayers Union estimates that up to 60 percent of U.S. properties are overassessed. If you believe yours has been, gather documents that support your case and ask for an informal meeting with a representative from your local assessor’s office. If the assessor won’t agree to a meeting, or if your assessment isn’t adjusted as a result of the meeting, you may want to file a formal appeal.
The appeals process varies greatly, but most municipalities require appeals to be submitted in writing along with evidence that supports the request for a reassessment. Once a formal appeal has been filed, a decision generally is handed down within two to four weeks. If you aren’t successful, you may be able to take your appeal to a state review board. If you’re still not getting the answer you want, you may be able to take your case to court – at which time you need to consider whether court fees outweigh any potential reduction in property taxes.