Property taxes add up year after year, and lowering your property taxes, or avoiding property tax increases can result in substantial savings on a home over time.
As property values across the nation are on the rise, lower property taxes on a primary residence are unlikely to materialize without a bit of effort and knowing where to look for savings.
Dispute the Tax Assessment on Your Property
Challenging a tax assessment isn’t a difficult process, but it is a process. Every year, there is usually a deadline for challenging a tax assessment in each municipality.
A board of reviewers is usually appointed by elected officials to review tax assessment disputes.
Be professional, courteous, and have plenty of backing information to present to make your case.
While hiring a lawyer isn’t necessary, it can be very helpful.
Even if you don’t hire a lawyer to represent your case, a consultation with a real property lawyer may provide insight and give you a clear idea about how solid your case may or may not be. Do lots of research, and make sure you know where to look for eligible tax breaks.
Preparing to Challenge Property Taxes
Begin the process by conducting as much research as possible, and gather evidence to make your case.
First, take a look at your home’s assessed value. This amount is not based on an individual appraisal of your home, but on the values of homes in your market at a certain time when your municipality conducted a valuation of all of its homes.
Know the market value
If it was conducted when market values were much higher than the present time, the figure might be inflated as well, and it may make sense to challenge your tax assessment.
If the assessed value is less than the current market value, it may be best to leave the assessment figure alone, or the challenge could result in even higher taxes.
It’s also possible the assessed value isn’t based on accurate information.
Take a look at the square footage, the number of rooms, and other details on your assessment or tax bill. If any of the information on the assessment is incorrect, challenging it may be a good idea.
Various Tax Breaks Available
Restrictions that have an effect on valuation
If any part of the property is designated as wetlands, you may be entitled to a slightly lower home valuation on your assessment if the use of the property is restricted because of the designation.
Talk to the local property assessor to find out if these restrictions have been taken into consideration during the most recent assessment.
A denial of a building permit by a state or federal conservation agency is a significant form of proof you can use to make a case before the assessment board for a reduction.
Tax advantages for veterans
Members of some groups may be eligible for tax breaks as well, such as disabled veterans.
A discussion with the local tax assessor and representatives from the Department of Veterans Affairs will be valuable in determining if tax exemptions are available.
Seniors and others with disabilities may also be entitled to property tax reductions or limits on rate increases.
When Challenging an Assessment Hurts You
It is important to remember there are circumstances in which seeking a reduction by challenging an assessment might lead to some unforeseen problems.
If parts of the property are out of compliance with local property codes, for example, initiating a challenge to the assessment may bring those non-compliance issues to light. Be sure to read the local property statutes.
Many homeowners are surprised to learn that even small items such as handrails on all exterior stairs are required by most local zoning codes.
If the paint is beginning to peel on some exterior surfaces, but you’re not ready to tackle project yet, an assessment dispute might mean you’ll need to do it on the municipality’s schedule and not your own.
It’s also possible the property may contain buildings such as a shed or other additions for which previous owners did not obtain permits for their construction.
Be sure you know the rules, the property’s history, and what pitfalls may lurk on the property before meeting with the assessor.
Shirley is a staff writer for MyBankTracker who covers personal finance trends, money habits, mortgages and foreclosures.