Appealing Our Property Tax Re-Assessment

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As many of you know, we renovated our house this past fall. The work that we had done included an addition, replacement of our deck, conversion of our old laundry room into a powder room, and the construction of a small outbuilding.

Over this past weekend, our property tax re-assessment showed up in our mailbox. While I was expecting to see an increase, I wasn’t prepared for what I saw when I opened the envelope, especially given current market conditions.

As it turns out, we’ve been slapped with an increase that pushes the assessed value of our house well beyond fair market value. I know this because the house next door, which is more or less comparable to ours, though it’s a bit larger and has a concrete instead of asphalt driveway, sold within the past month for considerably less than our assessed value.

So what’s a guy to do? Appeal the re-assessment, of course. I’ve drafted a letter to the County Board of Tax Assessors outlining our case. Here it is (minus some sensitive details):

To whom it may concern,

We are writing to appeal the recent re-assessment of the following property:

[Our property details, including address and parcel number]

This property (our primary residence) was re-assessed due to renovations. However, we believe that the new assessment in that our property has been assigned a value well in excess of fair market value. What follows is our reasoning, based on a recent comparable sale directly adjacent to our property.

According to county records, our property has the following characteristics:

[Square footage, lot acreage, other pertinent details, assessed value]

The comparable property (located at 123 Next Door Street) has the following charactersitics:

[Square footage, lot acreage, other pertinent details, assessed value]

As you can see, these two properties have equivalent lot sizes, but the latter has more heated square feet and a concrete instead of asphalt driveway. Given that the assessed value of our property is substantially higher than the fair market price of a more valuable property located directly next door, we believe that an adjustment is in order.

Thank you for your time and attention to this matter.

Sincerely,

nickel and his bride

While I think we have a solid case, I’m a bit worried about that fact that the paperwork that we received states that the re-assessment is intended to reflect the fair market value of our property as of January 1, 2008. Unfortunately, the most pertinent comparable sale (that of our neighbor’s house) occurred within the past month.

The only other properties that have sold in our neighborhood within the past year or so are really different from ours in terms of lot size, square footage, etc. While it’s possible to go outside of our neighborhood for comps, we’re in a relatively isolated area, so you have to go quite a distance before you run into similar types of houses.

So… I’m going to take my best shot with our neighbor’s house as the primary data point. If things don’t work out, we can escalate our appeal beyond the Board of Tax Assessors. Either that, or we can try again next year.

14 Responses to “Appealing Our Property Tax Re-Assessment”

  1. Anonymous

    This makes me very curious, we just had an assessment done as well. I wish you luck and hope you let us know the outcome of this letter.

    Deck, underground sprinkler, patio, minor landscaping, and some bricks along the driveway… There are currently 3 houses nicer than ours for sale on our street so I should be able to get some price points to compare in the next little bit.

  2. Anonymous

    In California, because of Proposition 13, the county can only fully reassess the entire property upon a sale. In the case of substantial renovation project, they usually increase taxes based upon one percent of the cost of the renovation work.

    Also, in California, you can do what is called a Proposition 8 appeal. This appeal is for a temporary reduction in assessed value, if your property is now worth less than is assessed value due to a deterioration of the economy.

  3. Anonymous

    I successfully appealed a property tax assessment on vacant land that we own in Mass. It was pretty easy to do because the only real issues were how much land we owned and whether or not the land has a water view (it does not) and then I documented the land value for similar lots (non-water view) in my same neighborhood. I got about $200,000 knocked off the value and reduced the assessment.

    On the other hand, comparing home values gets tricky. I\’m sure it depends on your individual taxing district but in many districts a brand new (read renovated) kitchen is worth more (and therefore taxed more) than an original kitchen in a comparable house. So if the next door house that sold (your comp) was built in the 50s and never had any upgrades or renovations it might, again depends on your taxing district – some go simply by square feet, not stand as a valid comp.

    Good luck!

  4. Anonymous

    Don has it right about maryland. Thank the Lord I live in West Virginia(who benefits greatly everytime maryland elects a new liberal gov., not to step on anyone’s toes, but i’ve witnessed it first hand), but I work in Maryland so I hear about the tax setup. It is crazy, especially if you live in Cumberland(Allegany County). Fed+State+County(which is very high for the area)+City(which is also very high for the area)=the poor folks that live here get screwed on a regular basis. After see this mess, I will never own squat in Maryland, as it would just be taxed away.

  5. Anonymous

    Initial County Assessments are not usually done on an individual property basis, but by neighborhood and with broader market trends. Absolutely call, write, email your County Assessor’s office to request a second, detailed valuation.

  6. Anonymous

    Not sure where you are but some states/regions have statutes requiring that the county take the house off your hands at the assessed amount under certain conditions if you dispute it.

  7. Anonymous

    Well, here’s what’s going in in Maryland. Not sure of your state…

    In Maryland there is a Homestead Tax Credit and in the past most principal residences were automatically given the Homestead Tax Credit when assessing the amount of property tax you owe.

    However, starting this year, our wonderful new Democratic Governor has included in the new tax legislation that was recently passed a provision that requires that you now have to request the tax credit by filling out an application. In other words the tax credit has changed from an automatic opt-in to an automatic out-out.

    It is a nice little political trick to raise additional tax revenue from unsuspecting folks who don’t hear about this and lose their tax credit.

    In Maryland, each property is on a three year rotating tax assessment schedule. If your property was assessed this year you should have already received your tax assessment statement. This statement should have included a letter that explains the homestead tax credit and how to submit an application to get it.

    I just found out about this and wanted to let you all know in case you didn’t realize this was happening and/or (like me) didn’t read the letter that came with your tax assessment.

    CHECK OUT THE WEBSITES FOR INFO AND PAPERWORK.

    http://www.dat.state.md.us/sdatweb/real.html

  8. Anonymous

    I just got my letter in the mail and the city has reduced the value of my home by $3000, but just last week the local newspaper run an article on the front page saying that the average home has dropped by $20,000. Talk about getting screwed.

  9. Yeah, the first step in the appeals process is a written request. If they don’t budge, then I can request a hearing. For now I doubt there’s much need for a professional. I can always bring in the big guns at the hearing if necessary. I might consult with our realtor, though. Things are so slow right now that she should have plenty of time to help out.

  10. Anonymous

    Depending on where you are, the letter may be all you need to have them reassess the property value. Often times they don’t want to go to the expense of having the appeal process go to a hearing. Good luck and be sure to let us know the outcome.

  11. Anonymous

    Since most of these assessments are “drive-bys” without any real appraisal of the actual property it is a good idea to challenge your tax bill when it jumps. I agree with dogatemyfinances on the idea of getting your own detailed appraisal to challenge the tax assessor’s figure. Hope they come to their senses!

  12. Anonymous

    It’s definitely worth a try. I successfully appealed my reassessment a few years ago. Go into your hearing with plenty of numbers and clear logic, presented in a level-headed, reasonable manner and you are likely to prevail. The sale price of the neighbor is relevant even if it sold after the artificial deadline.

    Bring a copy of the Wall Street Journal, too, to remind them of the recent, um, blip in the housing market…

  13. Anonymous

    I’m not sure how much money you are talking about, but if it’s a lot, it might be worth hiring a professional.

    My neighbor paid $300 and got her house reduced by 100K. That’s standard practice here, and they just ignore homeowner whining.

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