Homeowners tend to blindly accept the tax assessment on their homes, even if an assessment is wildly out of whack. You could be paying hundreds or thousands of dollars more in property tax than you should be.

Most homeowners never question their tax assessments. Yet property taxes are often arbitrary because they depend on an assessor's subjective value of a home. Glaring mistakes and unfair assessments are common, even among neighbors on the same street.

In recent years, property-tax hikes have been a preferred way for budget-strapped municipalities to generate additional revenue. This tax policy of soaking homeowners has grown worse, as home values rise during the current economic recovery.

Keep in mind that properties typically are assessed only every several years or more, which means the designated values can be behind the curve and not in synch with reality.

You should review how your property tax bill compares with those of others in your neighborhood or town. When an appeal is successful, your tax reduction carries over to future years. It's possible to win and if you do, you'll reap huge savings.

Appeal procedures vary. But if you have a valid claim, most assessors will either lower the assessment at once or re-examine your property. That adds up to big bucks for ordinary homeowners.

All the information you need to determine whether your property assessment and tax are excessive is available to the public. Most homeowners can do the research and handle the appeal themselves, but enlisting the help of a real estate agent will increase your odds of success.

When challenging an assessment, your real estate agent can be an invaluable partner. He or she will know which records to access, the specific officials to contact, and how to properly file an appeal. They'll have the assessed records of you and your neighbors at their fingertips.

The most opportune time to file an appeal is right after you receive a new assessment. However, older valuations can be challenged at any time, based on the valuation at the time of the assessment. The sooner you act, the better, because you can't recoup previous payments.

To determine how much the assessor thinks your property is worth, you need to know your locality's multiplier of assessed value, or other formula.

What really matters is how that assessed value compares with those of similar properties. Some municipalities use sales prices of similar, recently sold properties to come up with a home's market value. Another method is to estimate the cost of replacing the home.

Here's how to protect your net worth from an unfair assessment.

To make a case for a lower assessment and property tax, you must demonstrate that your home's assessment is excessive predicated on any one of these conditions:

  • Your tax rate differs greatly from that of your neighbors.

Your assessment could be excessive compared with people who live close by. Properties in your neighborhood that are similar in style, size and amenities should carry similar assessments.

For example, if you live in a three-bedroom colonial on a half-acre of land and the house across the street is almost identical, but their property taxes are considerably lower than yours, you're getting gouged.

Pay a visit to your assessor's office and ask for your neighbors' assessed values and tax bills. They're legally accessible to you. Try to unearth tangible evidence of a discrepancy compared with three to five nearby homes like yours in the same area.

  • The assessor's record contains factual errors. An inadvertent numerical mistake can generate an excessive assessment. At the assessor's office, ask to see your property's record card. Verify the property description, square footage of the lot and home, materials used and major features, including number and types of rooms. A simple mistake in math could be robbing you of thousands of dollars every year.
  • Recent sales prices. Homes comparable to yours may recently have changed hands for less than the value on which your assessment is based. Conduct research on comparable properties that have sold within the last six months. An easy, quick and efficient way to track down price information is from local real estate agents. An agent will have all of this price information in their databases.
  • Sales prices compared with assessed valuations. Look up the assessments on recently sold properties. Ask your real estate agent how your town's assessments compare with sales prices. Divide the average assessment for the group of recently sold homes by average sales price to determine percentage of market value. If your home is assessed at a significantly higher percentage, you may have a convincing case.

Assessments usually are appealed at an informal meeting with the assessor, or by application. If the assessor rejects your claim, you can appeal to a local or county review board. Your real estate agent will know about the procedure and filing deadline. If your case involves a relatively large sum, it would pay to have a lawyer or real estate agent present your case.


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John Persinos is an investment analyst with Investing Daily.

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