Property Taxes Too High? Here's How to Fight the Tax Man

Jan. 10, 2012— -- Here's a big heads up about a chance to save big bucks! In many jurisdictions, this is the time of year that you can appeal the property tax assessment on your home. Home values have fallen in most parts of the country, but often tax assessments have not. So fight 'em!

Let me throw out a couple of statistics from the National Taxpayers Union that, taken together, spell opportunity: 1. 60 percent of homes are overvalued for property tax purposes. 2. Only 2 percent of homeowners appeal their property taxes.

So strive to be one of the few, the proud. The National Taxpayers Union says the majority of homeowners win at least a partial victory.

Once you receive your property tax assessment and realize it's too high, you need to move quickly because the window to appeal is usually very short. Depending on the rules where you live, you will only have 30 to 120 days to let the local government know you intend to appeal. Send your appeal application by certified mail or hand deliver it and get it stamped, so you will have proof that it arrived by the deadline.

Follow the tax office's appeal instructions to a T, so your case won't be thrown out on a technicality. The first step is to ask your city or county tax assessor's office for the materials it used to evaluate your property. As an example, in Washington, D.C., where I live, the office of Tax and Revenue will send you the "property worksheet" which consists of its notes on your property; and also a "sales list," which is the list of recent home sales that it used to set the value of your property.

Once you get these internal government documents, you should scrutinize them, looking for errors that give you a great argument for your appeal. There are really only three basic arguments you can make to appeal your tax assessment. That keeps it nice and simple. See if one applies:

1. The assessor made a mistake in describing your house. This argument covers situations where the assessor made simple math mistakes. Maybe he got the square footage wrong (only heated, livable areas should be counted), or stated that you have five bedrooms when you have three. If you uncover these errors, lucky you – you've just upped your chances of a slam dunk win. All you have to do is gather documentation and describe the errors in writing or in person.

2. You just bought the house for less. If you recently purchased your home for less than the assessed value would indicate, lucky you. If the assessment is wrong, and grossly inflated, you're likely to win your appeal. (If the assessment is right, you will lose, but it means you got a tremendous bargain when you bought the place!) This is pretty cut and dried, and can probably be taken care of with a simple letter or phone call.

3. The assessor made poor comparisons in valuing your house. In this third situation, the assessor put a value on your house by using comparables that aren't, well, comparable. If this is the case, you can argue that the houses the city or county used as comparisons are far better and nicer than your house. You want to be accurate, but it's the one time you want your home to come off as crummy as possible! According to attorneys who handle these cases, the difference between your house and the comparables needs to be at least 10 percent for you to have a good case. Some jurisdictions will actually tell you what percentage difference they consider actionable.

My neighbors appealed their property taxes and won. They persuaded the city to lower their home's assessed value from about $600,000 to $550,000. Since lowering your property tax assessment saves you money for years to come, here's an approximation of their five-year savings: