Negatives to Appealing Your Property Tax Appraisal?

In My Humble Opinion
1

Just wondering if anyone knows about the potential negatives to a successful appeal of your property tax appraisal.

One one hand, were are getting completely hosed, because despite being one of the smallest houses on our street, and despite the fact that there were two reappraisals by the county since we purchased, we are getting charged more than anyone on our street, even though others have much higher square footage.

The weird part is that all of the sites (Zillow, Realtor, Trulia, etc) that, granted, are not known for their accuracy, but supposedly get all their info from the public/county records, all show us at the lowest value on the street, yet the county’s actual records/tax appraisal puts us at one of the highest values. Not sure how that is even happening, since it is a completely opposite outcome based on one set of public records.

I’ve been going back & forth on whether to appeal or not, and have been looking at the tax records to compare with the 20 or so houses on our street (one of which started as the exact duplicate of our Cape Cod but has had additions added with now much higher sq ft and STILL getting appraised/taxed less).

The one thing that gives me pause is that in my frequent checking I just noticed a reversal of the above with two of the houses on the street. Suddenly, their tax appraisals have been changed to much MUCH less (scary less), and I can only assume they have appealed. If they are planning on staying there forever, I understand that is a good thing.

We, however, are always thinking we’re going to move “next year,” and there is always that possibilty. I am very aware that tax appraisals and real market value appraisals are supposed to be two different things, but I also understand what an awful housing market we are in, and that more and more buyers use their many finds on the internet to determine what they are willing to pay for a place, realistic or not.

My concern is whether a successful appeal is worth having a super low appraised value on the books, or if from a potentially soon seller’s standpoint, I should just suck it up and give the county tax man the extra payola as unfair as it is?

Thanks for any experienced/knowledgeable input!

2

Don’t forget that some potential buyers will see lower annual taxes as a positive thing, as they should - it’s right there in the MLS sheet.

3

You might also want to look at recent sales, to see if they track the property tax appraisal. The county I live in always has a lower tax value than the sales price would seem to support - e.g. when we bought our house in 2002, the tax appraisal was about 65% of what we paid. You’d think that the next year, it would represent what we paid (since after all, the house really WAS worth that much judging by what we and others paid that year). But no, the next year the appraisal was about 82% of what we paid.

So a lower appraisal might or might not be what the place would sell for.

Realtors and house-sale appraisers come up with comps based on what houses have actually been selling for, not based on the tax appraisal value.

So the only thing you’d have to lose, in my mind, is if somehow they come up with a HIGHER value. That can happen - but if your neighbors are getting appraised for a lot less, it seems unlikely.

4

The fact is that a potential buyer will look at the assessed value. It only becomes a problem for you if you plan to price your house quite a bit higher than the assessed value, which might happen if you appeal your current assessment. If your current assessment is close to what you’d like to sell for, I wouldn’t bothergetting it changed.

5

Thank you all…it is so stressful…On one hand I feel like we are being picked on or something because it is so bizarrely different from the others, and on the other hand I’m worried about that appraised value number, which is what a lot of people zero in on rather than seeing the whole picture.

One of these days this week I’m going to sit down and make a big spread sheet of everyone on the street, rather than going back and forth over and over, and really look at everything in one place. I feel like every time someone appeals (or in the case of one neighbor, ignores their tax for years) it gets added to our bill because we’re the lame-os that just pay and shut up. :smack:

Yes, it is currently very accurate to what it would be priced at…the two houses down the road (one bigger, one about the same sq ft) that just had the tax appraised value change REALLY scare me because they are now at SO far below market value even in this awful market.

6

I think you need to look at the description of your home on the tax roles.

We considered appealing our taxes because they weren’t in line with current selling values for like properties - assessed value, while eagerly elevated with the real estate boom, did not decline based on current actual value.

When we looked, it was apparent that our 50+ year home had not been updated in description. We have 2 full baths while originally there was one. Basement has been finished. We have a large view deck.

Based on that, even though we believe that we were probably still overvalued by tax assessors, it’s possible that we’d be opening up a can of unknown response. Worst case scenario we’d be assessed even higher. And any potential decline in assessed value based on continued declining real estate market would be negated.

Of course the situation might be different with you.

Also, because of years of discrepencies with assessed value vs real value around here, it seems like the tax doesn’t have as much to do with how people price their homes for resell.

7

I keep meaning to appeal and I keep forgetting before the deadline - three years in a row now - partly because I’m afraid that they’ll do worse to me. Mine went up partly because they all went up, ridiculously so, but partly because I added a garage with a bathroom and small kitchen in it. I’m a little wary of them saying “Yep, and actually we’re going to call this rentable and tack on more!”

8

We appealed ours when they assessed it too high a year or so before the recession began. They sent out the assessor to go through the house and they had incorrect information (an extra bedroom and bath) on their listing for the house, so they agreed to knock $30K off the assessment. That was still about $10K more than we would have liked, but our county had been heavily pawlentied, so we chalked the rest up to paying our fair share of the county’s/school district’s shortfall.

Nowhere on the information we had received was there any indication they had the wrong number of beds/baths, so it’s a good thing we appealed it. Of course, for the last few years since the housing crash our assessed value has dropped, so we’re now back down to where we were before.

9

Tax collector weighing in :smiley:

In my area houses rarely sell for the assessed value. The assessed value is not meant to equal market value; it’s used by the taxing district to determine tax rates. The taxing district determines that they want a certain amount of real estate tax revenue in their yearly budget and they use the total assessed value of all taxable properties within their district to figure out the rate.

That’s why the taxing bodies don’t like to reduce your assessment because it means less money for them.

As a fellow taxpayer I say screw that and go for the appeal :smiley: If you decide not to sell, why pay more taxes than you have to, and like **It’s Not Rocket Surgery **said if a potential buyer thinks the taxes are way too high for the property, it might make them change their minds. Plus a lot of people do think that assessed value=selling price and if they think it’s too high they will look elsewhere.

Your best bet would be to find an independent appraiser (who will actually come and inspect the property instead of just calling up the tax office to find out what it says in the tax rolls) and find out well ahead of time what the procedure for appeals is so you can determine if the cost and hassle of the appeal is worth it.

10

Realtor here. I think you have to weigh the reduction in taxes for a year or so vs. the possible reduction in resale value with a lower assessment, vs. the more attractive sale with lower future taxes. Which is the largest factor and benefits you the most in the long run?

There’s no hard and fast answer.

11

Typically, the taxes are based on WHEN the property was purchased. Thus, a house on the same street that was purchased in 1985 and has doubled its square footage via proper permits may be taxed much less than a much smaller house purchased in 2005.

There are other nuances to consider, as well.

My parents signed their house over to my husband and me in the mid-1990s. Because it was a no-strings-attached gift for “love and affection,” we filed the paperwork with the Assessor’s Office and were allowed to CONTINUE to pay the same tax my parents paid.

When we listed the house to sell at the end of 2005, the Realtor looked at our taxes and said, “This isn’t RIGHT.” After explaining the circumstances, the incredibly lower tax rate was understood.

Challenging a tax bill on your property is a two-edged sword. Your taxes could go UP as well as down.
~VOW

12

See, I understood that part at first when we initially purchased it, but once the reassessments were done again after that (and in our case TWICE since then) I thought everyone was supposed to be on even footing again?

I compared the details of what they have on our house and they are all correct (bedrooms, etc)…I am really positive it would not go up (it is truly ridiculous right now compared to others too)…I guess the issue is resale and I think I am leaning toward not appealing now as unfair as it is, because if it makes our value anywhere near what the other two plummeted to, that would be nuts. :smack:

13

I would disagree. This may be common in the municipality where your house was, and some places do have restrictions on how much the tax bill can jump over time, but I don’t think it’s a standard approach.

Around here, the taxes are based on the market value of the place, regardless of how long you’ve owned it. While they may actually be a little lower (as I noted above), everyone on our street is paying roughly the same amount (allowing for differences in lot size, bedroom count etc.) regardless of whether they were original owners or bought the place 2 years ago.

14

Check with a local realtor to find out their take on whether a lower assessment means people will pay less for the place. Typically the opposite is true - the next assessment is done based on what the place most recently sold for (or what comparable places recently sold for).

As someone else said, “taxes: 3,000 a year” looks a lot nicer in a MLS listing than “taxes: 6,000 a year”. MLS does not list the tax assessed value.

Why pay more than you have to???

15

California had massive changes to property tax assessment in 1978 through Proposition 13. Homeowners were getting socked with tax increases every year, and some folks were being taxed out of their homes. Prop 13 first accomplished a roll-back, and then capped the amount that taxes could be raised on homeowners. The “catch-up” on assessed values wasn’t allowed to occur until the property changed owners.

Property taxes became a sacred cow after that. And you can understand why it was so critical to us that we were able to maintain the same tax rate as my parents had when they signed the house over to us.

As always, YMMV.
~VOW

16

Yeah - I remember Prop 13 (not a California resident here but it has made national news here many times).

Mixed bag - good in that it saved people from being taxed into oblivion, but the localities’ budgets were hurt (or, at least, not “helped” by being able to reap a windfall from property values).

My county (just outside Washington DC, and a very high priced area) never had any kind of cap, and they made out like bandits during the early 2000s during the housing runup. They raised assessed values - BUT they lowered the property tax rate, so their income didn’t actually go up that much.

When the bubble burst, they lowered the assessements and raised the rates! Our taxes did actually drop, but just by a couple hundred dollars (less than 10%).

17

I think you are referring to California, in the aftermath of “Proposition 13.” In my state, the purchase date has nothing to do with the valuation.

18

We have something similar to Proposition 13 on the books here; however, towns – mine included – get around this by suddenly jacking up the value of everyone’s home and basing the year’s property tax off that. I didn’t know this until I looked at this year’s tax bill with its $400 jump: Suddenly my house is worth 30K more than what it was worth last year?!? In this economy?!? With no updates since I was in college, which was eons ago?!?

19

Without knowing if there was a blanket revaluation, I can’t tell if that is a one-year jump or several years. A reval revises ALL property values to bring them back in line with the market, and that might have happened in your case.

In my area, the assessed value (upon which the tax is based) does not change between revals unless there was a major alteration on the property, like building a house, adding a room or a successful challenge by the property owner. Revals can be many years apart; if the market is stable, there’s no reason to do one, which costs the town a lot of money.

20

I’m in the same exact boat. My neighborhood has been noted in the local media as the greatest increase in property values in the city (turning from well maintained working class ethnic neighborhood to young yuppies) and I only have a half lot BUT there are improvements that aren’t being taken into account. New taxes (2013) will be 75% of appraisal (we paid 2k over appraisal) but some people are paying 30-45% of appraisal in certain areas.

Dontcha just love gubmint?