11 Expert Property Tax Appeal Tips

11 Expert Property Tax Appeal Tips

 

1. Know the law – Visit your county or city assessor or their website, or your state department of revenue, finance, or taxation to learn about the property tax laws where you live. For example, what is the effective date of appraisal? Typically you can only use market data from before this date in a property tax appeal. If they don’t reappraise property every year, can you appeal regardless? What value are you appealing in a year that they don’t reappraise, the value as of the current year, or the value as of the last appraisal date?
   
   
2. Check your property record card (PRC) for accuracy – Before you appeal be certain that the tax assessors have an accurate description of your property. You don’t want to appeal if their property description is inferior to what is really there. Do you have a copy of an appraisal from your purchase date, or refinancing date? Compare information from the appraisal to what the tax assessors have. Is the square footage of living area close? Is the percentage of basement finish close? In other words, don’t get caught inviting the assessors to increase your taxable value next year.
   
   
3. File your appeal before you try to negotiate – We are all busy and if your county or city invites you to discuss your taxable value before you formally appeal be mindful of any property tax appeal deadline. I recommend that you don’t take a chance, preserve your rights as a taxpayer and file the appeal first.
   
   
4. Find sales in your market area – Ask a realtor friend for comparable sales in your market area. You want sold properties that are most similar to your property in terms of size, age, and other physical characteristics. Perhaps you already know all of the properties that have been listed and sold, or expired in your area, write down the addresses. You can also find sold properties online if you hunt for them. The National Association of Realtors’ website shows sold properties that have been listed on multiple listing services of their member brokerages.
   
   
5. Check your neighbors/competitors assessments – Again, compare your property to other most similar properties in terms of size, age, and other physical characteristics. In most states equity, or uniformity, is a valid reason to appeal your property tax assessment. The property tax burden should be fair, so properties that are very similar to yours should have very similar taxable values.
   
   
6. Use units of comparison – Units of comparison are utilized to facilitate comparison of the subject and comparable properties. When sale prices are reduced to size-related unit prices, the need to make adjustments for size differences is usually eliminated. Units of comparison vary depending on property type. Houses are typically analyzed on a price per square foot of living area basis. Apartment properties are often analyzed based on price per apartment unit, hotels by price per guest room, restaurants by price per seat, etc.
   
   
7. Use median price per unit – After you have broken your comparable sales and assessments down into the appropriate unit of comparison you can calculate some statistics based on the units of comparison. The preferred statistic for analyzing these is the median price per unit. The median is more reliable than the average because the average in impacted by outliers, or extreme values. The median gives a more tempered look at where your assessment per unit should be.
   
   
8. Compare your PRC to the PRCs of lower valued properties – Compare your property record card to the PRCs of those comparable assessments that appear low compared to your value. You may find that even though your property was built in the same year, with the same construction standards, and maybe even the same builder, your neighbors/competitors property has been given a lower quality rating than your property. Perhaps they have been given a different condition rating than your property for no apparent reason. This is good information to have if your state law says equity is a valid reason to appeal.
   
   
9. Ask for the COD of your neighborhood/market area – County appraisers use “sale ratios” or the ratio of tax assessment to sale price to analyze their taxable values. They use the median sale ratio from the market area to make decisions about the level of assessment. They use the coefficient of dispersion (COD), or average deviation about the median to make decisions about their confidence in their “sale ratio study.” The International Association of Assessing Officers says that single-family CODs should be 15.0 or less and for homogenous areas should be 10.0 or less. Commercial property CODs should be 20.0 or less, and in large, urban counties should be 15.0 or less. This COD information should be part of the public record, use it. If the tax assessors COD is high in your market area then their median sale ratio that is impacting your assessment is unreliable.
   
   
10. Don’t give them all of your information – If you have more than three sales that support a lower value give the tax assessors just three sales. Keep additional sales in reserve for any formal hearing you may have to attend. Also, if you have good sales data supporting a lower value and you have good equity information supporting a lower value, keep the equity information in reserve. Sometimes unscrupulous tax assessors will take the information you have supplied to them and simply build a case against the information, planning to pan you at the formal hearing.
    
    
11. Be willing to accept a higher value than what you want – Values fall in a range of numbers. If you have data that supports a value of $1 million and the tax assessor has information that supports a value of $1.3 million, be willing to accept $1.1 – 1.2 million, or something in the middle. You will appear more reasonable and both you and the tax assessor will get some satisfaction.

I hope this proves useful in your future property tax appeals. If you are aware of any other tips or techniques that I may have missed feel free to share them in the comments.