Property Tax Rebellion Brewing After Real Estate Collapse

Taking Action

The perceived unfairness is prompting many homeowners into action.

Newby, the New Jersey homeowner, says he has appealed his tax bill with local authorities and hopes to receive a reduction that would result in savings of at least $2,000 a year.

A cottage industry has sprung up to help homeowners file appeals. Newby is using an online tax service, Easy Tax Fix, that charges users $49 and helps them estimate the true value of their home and then provides them with an official appeals form they can mail to local assessors.

The company's co-founder, Adam Berkson, says that about a quarter of U.S. homeowners are over-assessed. In New Jersey, he says, about 70 percent of customers were successful with their appeal, with an average annual savings of $1,000.

Official Response

In some parts of the country, pressure from taxpayers has motivated governments to change their policies.

The assessor in Illinois' Cook County, the nation's second-largest county, lowered assessments last year for all the homes under his jurisdiction, estimating home values by measuring foreclosure rates and sales data. Cook County includes Chicago and its sprawling suburbs.

In other localities, however, governments can't afford to lose tax revenue. In many areas where reassessments have already taken place, governments have simply raised property tax rates to make up for the loss.

"It's a double-whammy," Sepp of the National Taxpayers Union says.

For governments, property taxes have been a blessing during the recession. While other sources of revenue, such as sales and income tax receipts, have dried up, property taxes have remained steady or even risen.

The Census Bureau reported last week that state and local governments collected $170 billion in property taxes in the fourth quarter of 2009, up 5.8 percent from a year ago. The gain made up for losses in other areas. Personal income taxes dropped 4.7 percent in this period, while state and local sales taxes declined 2.8 percent.

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