Cringing from your property tax assessment? How to fight property taxes, plus our experience lowering our property taxes.
Wondering how to fight property taxes?
Fighting your property taxes means getting your local tax assessor to lower your home’s appraised value (tax appraised value, not market value) so that your property taxes will also decrease.
That makes how to save money way easier!
I DIY’d reducing property taxes for our household back in 2010, saving us approximately $612.
And I'm dishing on all my secrets and tips for doing it yourself.
But before we talk about the best way to appeal property taxes, let's talk about how property tax is assessed, why they increase it in the first place, and reasons when it makes sense to fight yours.
Psst: another way to drastically cut expenses is lowering your homeowner's insurance.
How is Property Tax Assessed?
Property tax is calculated by multiplying your home’s assessed value by your local tax rate.
It's not usual for the local tax rate to decrease, so in order to decrease your property tax bill, you need to decrease your property's assessed value.
What Causes Property Taxes to Increase
Do property taxes change? Well…yes. But usually not in your favor.
Unless you're proactively fighting them, that is.
It's first smart to go over common reasons for property taxes to increase, as this would have been great information for my husband and I to understand before going into homeownership (read: we were totally surprised when we got a letter in the mail raising our home's appraisal value by 7% shortly after buying it).
Some common reasons include:
- A Sale Establishing a New Market Value: This is the one that got us. Since we had purchased our home at a price that was far above the previous appraisal by our tax district, the tax district changed the appraisal automatically to reflect the market value (which we conveniently had set for them by agreeing to a home price).
- An Increase in Neighboring Property Values: Ever wondered ‘why are my property taxes higher than neighbors?' They may actually not be. Property values are determined largely by the property values of homes around yours. So if your neighbors are making significant improvements, or have sold their homes for high prices, or if there are other improvements in your area (like a new shopping center moving in), then your home may be reappraised higher by default.
- You Make Sizable Home Improvements: When you renovate YOUR home (here's 7 ways to negotiate with contractors), you apply for permits to do so (hopefully, *ahem*). A new appraisal may be triggered based on what types of renovations you will be doing or have already done.
- The Jurisdiction Needs More Money: Your property taxes are a revenue fund for state and local governments, and sometimes they decide to increase the tax simply because they need more money to fund programs.
Note: With all these reasons, you might start to wonder, “do property taxes ever go down?” Well…while it can happen, it doesn't happen often.
Reasons to Appeal Property Tax Assessment
If you've been reading along, then you've picked up a few reasons to appeal property tax assessment already. But I want to outline several of them here so that you can be sure to know whether it's worth it or not.
Reason #1: You Hear a Neighbor Had their Property Tax Lowered
Ever wondered, “why is my property tax so much higher than my neighbors'?”
Maybe you go to a community meeting, or your HOA (Homeowner's Association) meeting, or you see in your neighborhood Facebook group that someone else fought their property taxes and got them lowered. If they have a similar home to yours, in a similar location, then you might want to fight yours.
Reason #2: There was a Major Disaster Near Your Home
I live in Houston, TX. We went through Hurricane Harvey, and hundreds of thousands of homes flooded right around ours (ours, thankfully, did not).
When you're in a disaster zone, then it's likely that the appraised values of the homes are going to go down.
And property values are partly based on comparables, meaning the selling prices of comparable homes to yours (local homes with the same square footage, number of rooms, number of bathrooms, etc.). So if their property value goes down…it follows that yours should, too.
Use this to your advantage and insist on a lower tax bill.
Psst: you might want to check out my series on flood insurance, what does flood insurance cover.
Reason #3: Your Home has a Good Chance of Already Being Over-Assessed
According to the National Taxpayer's Union Foundation, 30-60% of homes are over-assessed for tax purposes. That's a good chunk! But, only 2-5% of people ever appeal their property taxes.
Reason #4: You Bought a Home at One Price, but It Has Hidden Repairs Need
This is the reason why we ended up appealing our property taxes. We bought our home at a certain price, the local tax assessor then raised the appraised value to better match this market price. Except that then we found out we had tons of repairs that did not show up in the inspection report (meaning the appraised value was likely incorrect).
Instead of using a property tax appeal service, I DIY'd this myself.
Let me share with you the strategy that got our taxes reduced.
How to Protest Property Taxes and Win
In 2010, I got a big surprise in the mail: our local tax assessor increased the appraised value on our home by 7%.
I decided we needed to fight property taxes, as well as to share my experience and information about the appraisal appeal process so that in the event that your property has been unfairly assessed (hint: it's thought that 60% of homes are over-appraised), you can fight for a fair property appraisal without paying a firm or lawyer to do so.
That's right; I didn't have to hire a property tax appeal service!
There are three stages to filing a tax appeal in Harris County, TX (and the process likely looks similar where you're from):
- Stage #1: You can file your protest online, which resolves some of the appeals all together.
- Stage #2: The next phase is to have an informal meeting at HCAD, where Harris County representatives are given certain leeway to negotiate with you. If the issues still have not been resolved then it's onto stage #3.
- Stage #3: The third and final opportunity to protest your taxes is through a formal hearing with the Appraisal Review Board (ARB) and one other person who represents HCAD.
We had to go through all three.
Here's the steps I took:
Step #1: Gathered My Evidence
After getting over the initial shock of the letter and complication of the appraisal appeal process, I sat down to logically and rationally put together an argument to prove that our property was being overvalued for tax purposes.
Being an investigator in a different life (I used to be an environmental investigator for the state), I knew what HCAD would be looking for: actual evidence with specific examples, photographs, and numbers.
I gathered evidence by researching the costs per square foot of my home versus the other 14 homes on our street, and found that ours was assessed at $49/square foot, while everyone else’s averaged $39/square foot.
Next, I took photographs of each of the issues throughout our home, including the following:
- sinking sub-floor in our bathroom upstairs
- outdated A/C unit
- the exposed cement of our bathroom floor (we had to take the carpet up because the humid environment coupled with poor air circulation led to possible mold conditions)
- cracked and molding sink vanities
Finally I gathered our inspection documents plus quotes we received from several companies to fix some of these issues.
Hint: our inspector found a few of the issues, but not all of them. This becomes very important in our argument, and likely in yours if you use the same one.
The actual argument (I had several) that won my case to reduce my property taxes is as follows:
Yes, selling our home established a market price, which was much higher than the appraised value of the home. So raising that value makes sense. However, we established this market price with faulty information. It turns out that our home inspector missed several key issues that needed repairing on our home (I provided photographs, quotes from professionals for the repair costs, and highlighted areas on the inspector's report showing where these items were checked off as “in good repair”). Had we known the actual condition of these items, we would have offered a lower asking price. Thus it follows that our home’s value should not have been raised as high as it was.
Step #2: Filed a Property Tax Appeal Online
To begin the process, I filed a property tax appeal online.
Our argument at this point in the process:
- I explained the significant difference in square foot pricing between our house and the others on our block, as well as the issues discussed above that needed to be fixed.
Unfortunately, this was not enough to resolve the issue, and so the next step was an informal meeting with a representative from HCAD.
My appointment was set for two weeks later, and I took off work full of optimism that once I could speak to someone in person, the issue would be resolved.
Step #3: Met with the Appraisal District
An obstacle for new homeowners that I became painfully aware of during the informal meeting is that it is the appraisal district’s stance that a buyer establishes the appraised value of a home when they purchase that home for a specific price.
This of course makes sense, and if you try to argue that the home is actually worth much less than what you paid for it, you come off looking like a fool.
The woman would not even listen to my arguments, which I felt was a waste of both of our time. Point blank, she asked if I had had an inspection done before purchasing our home.
Of course we had inspected our home before purchasing it!
So her argument was that we should have known all of the defects and calculated our offer based off of that.
I have to say, it was a stellar argument.
And guess what else? It helped me establish the winning argument in the end.
Still, I felt that our appraisal was unfair, and so I went ahead with the formal meeting.
Only this time, I had more ammunition as I knew what their main argument was going to be.
Step #4: Went through the Formal Hearing + the Results
In preparation for our formal hearing, I prepared my documents and argument by highlighting what was found during the inspection and “fixed” by our sellers (and also provided the documentation showing that the sellers signed off on the inspection report saying that several of the problems had been fixed).
Then I got together the quote from a qualified expert after we had moved in showing that the sellers had not fixed several of those problems, and the dollar amounts it would cost us to fix them properly.
I also highlighted the quote for our chimney, which has issues that were not found by our inspector.
With this information, I went to the hearing.
The ARB was sympathetic to my argument, but only because of the documentation that I provided. I was able to prove that things came up after the inspection that we were unaware of as buyers, and that the amount we paid was probably too high considering these issues. The HCAD representative was completely rigid, however. After listening to my argument, the ARB asked the HCAD representative what she thought, and she was resolute in keeping the same value.
Fortunately for us it was voted on and they knocked 3.9% off of the value, which meant that overall our property was raised by only 3.1%. I felt good about meeting them somewhere in the middle at the true appraised value of our property.
The result: I got our tax-appraised value decreased by 3.9%. They did not raise it again for another three years, so all together my efforts kept about $612 in our pockets.
How to Win a Tax Assessment Appeal Specific Tips
- Fight Your Property Taxes Near Retirement: If you are nearing retirement age, it is an excellent idea to fight your tax appraisal in a home you expect to stay in because many districts have a ceiling on some of your tax obligations once you reach a certain age (barring any large home improvements you make). In other words, you want to have it as low as possible before locking in that rate for the next 20-30 years.
- Read the Directions, Carefully: Read the directions your appraisal district has sent you; you will get brownie points just for doing what 50% of the population does not bother to do.
- Choose Facts Over Emotions: Forget about sharing fuzzy stories that don’t have specific dates or details, he-said she-said scenarios, and emotional drama of any sort (including but not limited to medical problems, financial problems, and poor-me’s). Just stick to the facts.
- Back Everything Up with Numbers: Everything you plan on discussing must be backed up with a number. After all, we’re talking about money here. Provide quotes from at least one company on how much it will cost to fix something and provide dates for everything.
- Put in the Research: Do your research on your county tax appraisal’s website to find out what the costs are of other homes on your street, such as the average cost per square foot compared with yours. Chances are good that you have to tell them what you think your tax appraised value should be, and by doing your research, you can come up with an appropriate number.
- Take Accurate and Detailed Photos: For photographs, make sure the date and time are correctly programmed into your digital camera (I know, I know…do people still use digital cameras? Try to put a time stamp on your smart phone pictures).
- Make Copies: Make lots of copies of everything; there will most likely be more than one person in the meeting (for Harris County you will need to make 4 copies of everything).
You Don't Have to Fight Your Own Property Taxes
While I decided to DIY our property tax fight, I found out later that you don't have to go this route. Which could be a good thing for people who weren't environmental investigators in their previous lives (like me), or who don't have the time to head on down to their local tax assessor's office twice to plea their case.
Two alternatives include:
- Hiring a Property Tax Consultant or Using a Property Tax Appeal Service: This person will fight your property taxes for you, and then take a percentage of any savings won.
- Buy a Report to Submit to Your Local Tax Assessor: Have you been researching this issue? Then you've probably seen the option to buy a report that you submit to your local tax assessor. Typically you'll pay $40-$65, and receive a report listing comparable house prices and appeals paperwork for you to submit.
I've now laid out for you how to fight property taxes so that you can win. So, what do you think…is fighting your property taxes something you will do, or get someone else to do for you? If you've done so in the past I'd love to hear your experience in the comments below.
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