At a time when most people are looking at every possible way to save money, one of the biggest opportunities is often overlooked.
For the average homeowner, in most parts of the U.S., real estate taxes take a significant bite out of their budget. But when taxes are escrowed into mortgage payments, they are easily out-of-sight, out-of-mind. Most people don’t even know they can access information, and should check to make sure they are not overpaying.
What you need to know
The local tax, or mill rate may be set in stone, but that is only part of the equation. The assessed value of real estate property is multiplied by the mill rate to find the annual property taxes. It is the dollar amount levied for every $1,000 in value. Every state does it differently. Some tax only on a percentage of the assessed value.
That assessment may apply to multiple taxing districts, such as schools, sewer systems and emergency services, compounding inaccurate taxation.
And some states may not conduct full property revaluations for as long as a decade. Others only when a property changes significantly, or when ownership changes. If you believe there has been a major decrease in your property value, you can seek an adjustment or rebate. You don’t have to spend years paying an inflated tax bill, or take a loss on overpaid taxes.
You could still be paying taxes on an old shed that fell down or a swimming pool that was removed. Maybe that new subdivision has intruded on the scenery. Yes, in many places, you will pay more – a lot more – for location amenities, such as a view or waterfront.
Where it is, is where it's at
Location plays the biggest role in how property is marketed. Because most tax assessments begin with the “fair market value,” based on recent sale prices, location is a major basis for tax bills.
It makes sense when you think about what value to place on a home. Construction costs and/or a mortgage amount drive that to a degree. But a house is a home, and there are plenty of emotional and aesthetic factors that play into the big picture.
Added value comes in lots of ways. A family home near a school is generally more desirable, as are homes in quiet neighborhoods. Privacy, natural features, such as a pond, availability of municipal sewer and water, nearby recreation land, waterfront, long views. Scan real estate ads and notice how these features are stressed. Location, location, location.
A municipal assessor has strict guidelines to follow in certain aspects of the job. But there is a high degree of subjectivity when it comes to putting a value on a property, whether it is done by an assessor or a privately-contracted company.
They begin with the only hard data they can use; that fair market value based on recent home sales in the area. It is, ironically, data that can be the most skewed. Market trends, a few lucky homeowners who got their original asking price, and everyone’s property values go up. That’s fine if you’re looking to sell. Not so great if you have to pony up the extra taxes.
Be your own advocate
The answer is to advocate for yourself. Know that land records are public. Assessors are town employees whose job includes helping you understand how your property is being taxed.
Ask for help in reading the “field card” for your property. It will give all pertinent information for the home and land. Check to see not only if the proper number of bathrooms is listed, but for less obvious designations. Are you being assessed for your hilltop location? Some places automatically triple the assessment for views.
What about deed restrictions? Conservation easements are becoming commonplace, and can represent a tax break for property owners, but only if the assessor records it properly.
Is it accurately listed for its development zone? Is excess acreage listed at a different rate?
Many cities and towns tax at a different rate, or offer a discount for property partially forested or used for agriculture, or when a residential properly abuts a commercial or industrial zone.
The answers are in the cards
Take the time to find out the meaning of every piece of information on the card. It all factors in. Find out exactly what your local tax guidelines are, including when revaluation is done.
A revaluation is followed by the establishment of a new “grand list,” which is the total of all taxable properties assessments in the municipality. It is one of the pieces of the formula used to levy taxes. Once that list is signed by the assessor, the only way to typically challenge an assessment is to wait for a prescribed window and appear before an appeals board. Most assessors will not send notices of new assessments until after they complete the grand list work.
But there are months of work once the revaluation process begins and before the list is finalized. That is the time to stop in or make an appointment with the assessor, look at the details of how a new assessment was reached and make an informal case for changes.
Even the tiniest towns list hundreds of properties. Mistakes happen. Any honest assessor will tell you that and be willing to make corrections.
Know what you’re talking about, go in with a tangible reason for a change, be respectful of the assessor’s expertise and work together to reach a fair conclusion.
Karen Bartomioli - Karen Bartomioli has been writing for a weekly newspaper for more than 19 years, taking a catch more bees with honey approach. Living, ...
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