How to Beat Back Those Ever-Rising Property Taxes
You Can Fight a High Assessment and Win

January 2005

If the dreaded notice hasn't reached your mailbox yet, it's probably on the way. Across the nation, homeowners have been receiving notices of rising property taxes. Even in New York City, where residential property taxes are relatively low. Mayor Michael Bloomberg boosted them by an average of 18.5 percent in 2002.

The hikes have been put in place by increasingly strapped towns and counties to make up for diminished aid from state governments and other budget shortfalls.

Such increases can raise your blood pressure and mess with your budget. If you live on a fixed income and can't keep up with the steep rises, they can force you to sell your home.

Don't assume that the increase is a given, however. Errors can easily make your bill higher than it should be. "Unfair or inaccurate tax assessments happen for many reasons - everything from software glitches to mistakes by assessors during housing valuation," says Richard Roll, founder of American Homeowners Association, a Stamford, Conn., advocacy group for homeowners. Estimates of overvalued property nationwide range from 30 percent to 60 percent. Many a homeowner could be paying hundreds more each year than required.

What's more, many who challenge their property-tax assessments win reductions. In Nassau County, N.Y., of 100,000 taxpayers who file protests in 2003, about 41,000 won reductions. The average reduction was $881 in annual property taxes.

In this report, we'll show you how to check whether your taxes are too high and tell you what you'll have to do if the evidence suggests an appeal is in order.

Aid Down, Taxes Up

For most localities, property taxes are the main source of revenue. They pay for schools, police and fire departments, street cleaning and sanitation, parks, and recreation. Such services make a community a desirable place to live and keep property values high.

But services don't always match the burden. Residents of cities such as Newark, N.J., and Baltimore, MD, have high tax rates but these don't necessarily produce enough revenue to support top-notch services.

You'd think that rising home values would automatically drive your property taxes higher. But the amount you pay also depends on how much your community spends on services. "Ultimately, what determines whether property taxes go up is the overall budget for the taxing district," Roll says. "If the budget stayed the same, and the number of properties stayed the same, even if values increased, there would be no justification to increase taxes."

But most local budgets are increasing these days. One reason: States are contributing less to school-district budgets. "States on average pay 60 percent of local school budgets. But that number is declining," says Myron Orfield, a law professor at the University of Minnesota and author of "American Metropolitics: The New Suburban Reality."

New jersey, for example, which has the highest per capita property tax rate in the nation, financed a rather low 39 percent portion of school expenditures in 1987. Today its share has dropped to 33 percent. "It ranks 46th out of 50 states in the country," Orfield says. When states carry less of the cost of public schools, the burden shifts to municipalities and then lands on homeowners.

Knowing How the Tax Works

Many people pay property tax as part of their mortgage and don't consider how the amount is calculated. Three factors generally determine what you pay:

The property value: To calculate it, an assessor compares local sales figures (the most common method) or estimates how much replacing a home would cost.

Before computers, assessing property was not very scientific. Assessors manually updated their records, and they had no way, other than visiting, to compare similar houses. Now, however, assessments are more carefully calibrated, thanks to software products that can take topography, zoning, neighborhood, a house's size, age, and dozens of other factors into account.

Periodically - usually every one to three years - municipalities conduct revaluations, or revals," of property. Disagreement with the assessor over the estimated market value of a property after a reval is what sparks tax appeals.

The ratio: Some states tax a fraction of a home's assessed value - 10 percent in Louisiana and 50 percent in Michigan - while other states, like Washington, tax a home's full value. You should make it your business to know if your state uses a fractional valuation and what it is. Otherwise you may be fooled into thinking that the $80,000 valuation of your $100,000 house was a good deal. But if your state ratio is only 65 percent of the home's value, then, in fact, you should only be paying taxes on $65,000.

The tax rate: All the assessed property is added up, then divided by the locality's budget. That rate is applied to assessed house values to determine the tax. Rates range from $3.75 per $1,000 of 100 percent of the assessed value in Honolulu to $29.65 per $1,000 of 50 percent of the assessed value in Providence, R.I.

Establishing a Case

Experts estimate that as many as 50 percent of taxpayers who challenge their property taxes win a reduction. But, says Pete Sepp, spokesman for the National Taxpayers Union, a group that advocates for lower taxes, "It's a self-selecting process-only those who think they have a case challenge their assessment." So it goes almost without saying: Don't challenge your assessment unless you have grounds for a reduction.

Nonetheless, when you receive notice that your property tax is rising-in your opinion, unfairly-you have to act quickly. Many municipalities require that you challenge the assessment within 14 to 90 days of receiving the bill.

Simple errors are a frequent source of over-valuations. To find out if there are any, get the records showing how the assessor arrived at your valuation. You can usually find such information at the county or town property-assessor's office. Records, long kept on cards, but now often in a computer database, list lot size, type of construction, number of rooms, bathrooms, bedrooms, and garages. If the records describe your home as having three bathrooms when you only have two, or describe your carport as a garage, your taxes may be higher than they should be.

Before you start a formal appeal, talk to the assessor. Bring documentation to back up your claim, such as photographs and copies of property records. If the records show that your house has 2,200 square feet when it has only 1,800, bring your deed showing the correct square footage.

Many assessors will make the adjustment on the spot. "The assessor's job is only to find out what is equitable for each taxpayer. They are not out to get the last nickel out of your pocket," says Randy Deal, an assessor in seven New York State communities. "If you can show the fair assessment, most assessors are willing to make the change."

Often, however, the issue is not black and white. You may have learned in casual conversation with a neighbor, whose house is much grander than your own, that she pays $1,000 less in property taxes than you do. Property taxes are supposed to be applied equally. If you can show that comparable properties in your neighborhood have significantly different assessments, you stand a good chance of getting your tax lowered.

That's more easily said than done, however - especially with software making many of the calculations. Start by asking the assessor which homes were used as comparables in your valuation. Then check the property records in the assessor's office to see if the taxes on those homes match your own.

If the assessor has valued your house at $375,000, but you know it was recently appraised at $275,000 when you refinanced, bring that appraisal as evidence. If you live in a ranch but the comparables are colonials or are ranches in more expensive neighborhoods, or your house has value-lowering defects, such as a cracked foundation, a leaky roof, or pest infestation, bring documentation from experts.

All states offer some form of property-tax relief. A homestead exemption, for an owner-occupied home, is a specific dollar amount subtracted from the assessed value. Circuit-breakers provide a tax rebate or income-tax credit to low-income homeowners. In Idaho, for example, elderly, disabled, blind, or orphaned homeowners earing less than $22,040 can receive a reduction of up to $1,200. In North Dakota, if you are permanently disabled, a veteran, elderly, or have a low income, 20 percent to 100 percent of your home's value is exempt from property taxes.

Using a Pro or Going it Alone

If the assessor doesn't grant you a reduction or offers you a smaller reduction than you believe you deserve, you may want to bring your case before the appeals board. Appeals procedures vary from place to place, so ask your assessor how to proceed. If the board turns you down, you can ask a state administrative appeals agency. After that, your only option is to sue in court.

Most homeowners can tackle the initial process themselves. You can use the Property Tax Reduction Kit ($29.95) produced by the American Homeowners Association. (Go to to download the kit and forms.) The kit also provides state property-tax office Web site links. Another source of help: "How to Fight Property Taxes," a guide available for $6.95 (plus $2 for shipping and handling) from the National Taxpayers Union, 108 Alfred St., Alexandria, VA 22314 or at

If your case is complicated and the potential savings warrant the expense, you may want to turn to a professional. There's a cottage industry of companies and lawyers specializing in filing property-tax challenges. These firms will represent you before the assessment-review board. Such services generally charge a percentage of your first year's savings. Check with the local Better Business Bureau, past customers, or your assessor's office about the record of any firm you are considering.

If you don't prevail, then perhaps you are fighting the wrong fight. "If you think your assessment is too high, the assessor's office is the right place to go," Deal says. "If you think tax rates themselves are too high, you should make your opinion known to the elected officials who make up the budget-your mayor, supervisor, city, village, or town council, county legislature, or school board."

A growing number of homeowners are forming grassroots organizations to push for lower property-tax rates. "People should be petitioning states for better funding systems," Orfield says. "That's the way to really affect property taxes. It is not going toe-to-toe with each local assessor." Indeed, this year, Mayor Bloomberg, sensing widespread disgruntlement, proposed, lobbied for, and won tax relief for New York City homeowners: a $400 rebate that brought the annual property tax back to about what it was before the hike.

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