Help a Reader Decrease Real Estate Taxes

Here's a reader question left as a comment on my post titled The Inside Scoop on Getting Your Property Taxes Reduced:

My wife and I purchased a house with a restrictive covenant. Specifically, one of its owners must be employed by the local university (Duke, in Durham, NC) or one of its associated hospitals. Because this leads to a smaller pool of potential buyers, we got the house at a good price for the neighborhood ($325K). However, it has just been appraised by Durham County at $411K. This is a fair price for a similar house in our neighborhood, but we would, of course, not be able to sell it at this price due to the restricted pool of buyers. My question: Is this grounds for an appeal?

I think it would be since the restrictions on the house impact it's value. But I'm not an expert on the subject. Anyone out there with a more informed opinion?

Comments

[Amanda D]

I'm sure it varies by state, but in Texas, I was able to show them the recent purchase price of my house, which was slightly under the appraised value. They lowered my appraised value that year, but of course it went up again this year. I would at least try to appeal- you have nothing to lose. Take your closing statements, a copy of the restrictions and an outside appraisal (this is usually done by the mortgage company when you purchase a home). Hopefully that appraisal will have the lower value. Good luck!

[Long Time Reader]

In most taxing jurisdictions, the property is valued at it's fair market value based on the "highest and best use" of the property. The jurisdiction may or may not recognize private deed restrictions as impacting the "highest and best" use or the fair market value of the property. In California, government restrictions on the use of a property (explicit or implied) are recognized, but private restrictions are generally not.

The buyer of this property should contact the Assessor's Office of Durham County and ask how this covenant affects the valuation for property tax purposes. It is best to speak to someone in the office knowledgeable about the property tax laws in North Carolina. The clerk answering the phone is trained to answer basic questions, but this question requires a higher level of expertise.

The buyer should also pay close attention to his/her appeal rights and filing deadlines. It's often a good idea to file an appeal to protect one's rights.

Finally, this value may be the product of a periodic revaluation or may have been done as of a date prior to the sale and may have nothing to do with this sale. Again, it's a good idea to understand and use the assessment appeal process.

[JimmyDaGeek]

There should be a brochure you can get that describes the steps you need to go through to challenge an appraisal. Request a copy of the appraisal worksheet showing how the appraisal value was arrived at. In my area, appraised values are an average between cost-of-replacement and average selling value. Don't forget that your appraisal consists of 2 parts - the house and the land. You can challenge each part. Also, check online to see if you can find out more information about similar houses and resales in your area since you will be required to document any challenge with comparable sales in the last 6 months. Good luck.

[ryan]

challange the appraisal b/c you have purchased in an "arms length transaction in a free market" thus establishing a market value.

this is what i do on all of mine, they will probably counter, but you will benefit.

[Commenter's Neighbor in the West End of Durham]

I love that neighborhood! I think you'd have a good shot at challenging your appraisal, especially if you can find a comprable/newer construction home in (what I suspect is) nearby Trinity Park and show how much more those go for. But for the Duke requirement, I'd be an even closer neighbor to you -- those are great homes.

The following information is from my neighborhood listserv, which was hopping with activity after the new rates came out:

The county website says:

"APPEAL FORMS ARE AVAILABLE IN THE TAX OFFICE OF
COUNTY ADMINISTRATION BUILDING (OLD COURTHOUSE), 1ST
FLOOR; BY WRITING - BOARD OF EQUALIZATION AND REVIEW,
PO BOX 3397, DURHAM, NC 27702; BY CALLING - (919)
560-0300; BY FAX - (919) 560-0385.

COMPLETED FORMS MAY BE RETURNED BY HAND DELIVERY, BY
MAIL, OR BY FAX."

And another listserv member provided the following recommendation:
if anyone is looking for an appraiser to use in
challanging their tax evaluations I used a very good
one in preparing my house for sale. It was:

Odell Appraisal Services
3215 Guess Rd # 204
Durham, NC 27705
(919) 471-9007

They were referred to me by the NC State Employees'
Credit Union.

Just FYI... also you may want to ask your credit union
who they use as well.
******************************************************************
Good luck to you!

[cfo]

Need to enroll at Duke to take economics 101. Not a good move to have bought the house with a restrictive covenant like this.