Property tax assessments help determine how much property taxes you’ll pay. Sometimes, appealing your assessment can help lower your tax liability if you can prove your home’s value is less than what the assessor estimated, especially if your taxes have gone up considerably.
How property taxes work
Property taxes pay for public needs and services, such as schools, hospitals, general funds, roads and other utilities. The tax rates are set by individual locality, often by county, and vary widely. In Daphne, Alabama, for example, the 2019 property tax rate was 0.33 percent, while in Binghamton, New York, the rate was 3.11 percent, ATTOM Data Solutions reports.
To calculate property taxes, your county or municipality will factor either the assessed or fair market value of your home compared to the value of other homes in your jurisdiction and set a tax rate based on budgetary needs. Homeowners with comparable properties, such as having similar construction, square footage and lot size, should have property taxes that are close in value.
Most counties have algorithmic computer systems that support the values determined by the assessor in order to ensure consistency and accuracy for each property, explains Jason Vanslette, partner at Kelley Kronenberg, a Fort Lauderdale, Florida-based law firm.
“However, as there are hundreds of thousands of properties in a given county, there could be several factors that might be missed when relying solely on the government-controlled equation,” says Vanslette.
What if the assessment is wrong?
If you believe your property tax assessment is inaccurate, you can challenge it, but usually only within a certain time period after receiving it.
In DeKalb County, Georgia, for instance, homeowners receive the assessment in May and have until July to appeal it, according to Bill Golden, a real estate agent with RE/MAX Around Atlanta.
In other places, you might have a shorter window. In Texas, assessments are generally sent out in April and homeowners have until the middle of May to appeal them. In South Florida, homeowners only have 25 days from the date a notice is mailed to file a petition with an appeals board, Vanslette says.
“This is a strict deadline, so be sure to seek assistance as soon as possible if you feel the assessed value differs greatly from your perceived value,” says Vanslette.
While some homeowners decide to conduct the appeal themselves, others opt to hire a third party who can take on the appeal for them for a fee.
“Services often charge a percentage of the money saved,” Golden says. “Whether that is worth it largely depends on how far off you perceive the assessed value to be.”
If you do it yourself, you might also be charged a small administration fee by your county in exchange for taking up the appeal.
Golden’s rule for appealing assessments is to consider whether the fair market value is less than what you would sell the house for.
“For instance, the county’s value of my house has gone up many times over the years, but so has the actual value, so even though it seems unfair that it has gone up so much, I know my house is worth more than they say it is,” Golden says. “It’s futile to try to prove otherwise.”
A real estate agent can help you determine whether the assessment is fair, usually by completing a competitive market analysis, or CMA. This can assist you in your decision to appeal or not.
Another way to determine if the value deemed by your county is fair is by examining other homes that were built in the same year and have similar square footage and improvements, along with other factors. You can include this information with your appeal to help make your case.
Should I appeal my assessment more than once?
Depending on where you live, you shouldn’t have to appeal your property tax assessment each year. For example, if there are significant events that take place annually, such as hurricanes, flooding or wildfires, that could devalue a property, there is likely no need to appeal every year.
Some states have limitations on how much assessed value can rise, as well, so it may not always make sense to appeal. In Florida, the state caps increases in assessed value at 3 percent.
“However, after you purchase a property and obtain a new assessed value, you should carefully consider whether the assessed value comports with actual market rate, as this will be a baseline value for many years thereafter without much deviation due to the caps,” says Vanslette.