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The National Taxpayers Union estimates that 60 percent of real estate in the US is assessed too high.  

There are many ways homeowners can go about lowering their real estate assessment themselves, but for those who would rather leave this sort of thing to the experts, the first step should be in locating and hiring a professional appraiser.  The best way to find an appraiser is to ask around among friends, family or your real estate investing contacts for a referral, or perhaps ask the realtor who sold you the home if you still have contact with that person.  Another option would be to contact the association for appraisers in your area.

If DIY is the best approach or the most feasible for you, here are some tips on the best way to gain maximum results.

First, know your window of opportunity.  The time allotted for challenging assessments is different based on jurisdiction.  Make it a point to learn all the rules including timelines before you begin your journey to the county assessor’s office. 

Always know your status as someone who might be eligible for any exemptions.  Are you a senior citizen, a veteran or are otherwise entitled to an exemption from property taxes or a portion of them?

Tax records are notoriously erroneous.  Be sure to check your tax records thoroughly for any blatant, or perhaps even subtle, mistakes which could make all the difference in your assessment.  An assessment on a home with completely different square footage, for example, will render an incorrect assessment amount.  Some tax errors will be blaringly obvious, but checking and re-checking all of the facts is always a good place to start.

Assess your neighborhood yourself to determine if your numbers are up to par with the rest of the homes.  There are times when entire neighborhoods have been assessed incorrectly, though a rarity.  

Be sure an assessment of your home reflects its true market value.  The true market value of your home can only be determined by taking inventory.  How does your home really stack up to your neighbors is a difficult but critical task you must perform to help determine an accurate assessment.  If you’ve improved your home a great deal more than your neighbors, then you’ll have to accept that the numbers don’t lie.  Similarly, if your home has issues that would turn buyers off, you’ll want to point those out to an assessor in hopes of some leniency.

Prepare, prepare, prepare.  Preparing for a property tax assessment should be approached the same way one would prepare for court- with full documentation of all necessary facts, numbers and other evidence to prove your case.  An assessor will need to have some proof of why you shouldn’t be charged the amount of taxes assessed, and it is your job to provide that proof.

Know what improvements have been made and how its value impacts your taxes.  Knowing what improvements to your home will cost you such as adding on decks, pools or other improvements before building them will help a great deal in determining how much more value has been added to your home.  Improvements, of course, not only increase the price you will eventually get for your home, but potentially the amount of taxes you will pay as well. 

Always make yourself and your entire home accessible to the assessor.  Failure to comply in most jurisdictions will resort in the highest assessment allowed.  Being as cooperative as possible, as well as pleasant, can help.

Funny Haunted House For Sale SignConsider functional obsolescence.  According to Steven Housman, President of Property Tax Experts, Inc, a property tax consulting firm in Hollywood, Florida, any design flaws in your home could make it functionally unappealing or otherwise less than marketable.  For example, are any "bedrooms" walk-through rooms?  Is the basement too short to be useful for anything but storing a few boxes?  Be sure to point those flaws out to the assessor who might not have considered it otherwise.

Highlight external obsolescence.  Similar to functional obsolescence, external obsolescence accounts for any external flaws related to the home itself or even the neighborhood or community.  Information such as active train tracks that run through the back of the home or homes directly in a flight path close to an airport would likely make the home less appealing and therefore negatively impact the home’s value.  Local environmental hazards may be referenced, or the local crime statistics, or perhaps a high prevalence of sex offenders on a nearby street… anything that might convince the ranking local bureaucrat that your property is not as valuable as they have supposed. 

Timing is indeed everything.  Know when your last assessment was done and what the market was doing at that time.  If your assessment was completed during the boom but hasn’t been assessed since that time, a reassessment is definitely in order.  If that is the case, chances are you are paying too much in taxes and having them reduced will be a cinch.

Remember that your property tax burden is often in your control, when you act expeditiously and knowledgeably.

Additional tips, resources and ideas may be found here:

http://www.investopedia.com/articles/pf/07/property_tax_tips.asp

http://www.kiplinger.com/slideshow/real-estate/T055-S001-7-steps-to-lower-your-property-tax-bill/index.html

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Categories: Tax Strategies

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