I Fought the Law and the Law (Mostly) Won

Here's a quick summary of my recent bout with the local tax authorities regarding my home's tax assessment:

• Got my tax notice (not the bill, simply the form stating what my new taxes were based on) on Saturday, February 21.

• The notice accounted for a 4.3% drop in both the appraised and taxable value of our home, a reduction of just under $150 in taxes this year.

• The actual value of our home is much closer to 11.3% down versus the last notice (at best). How do I know this? Because our home was for sale at this price for a month last fall when we thought we'd bought a new place. We had NO ONE interested, hence, as I said, this is "at best."

• The notice said that I had three days to call an assessor if I didn't agree with the numbers (the very next Monday through Wednesday, February 23 through 25). Recall, I got the notice on the 21st. Gee, thanks guys, for giving me plenty of time to consider the issue.

• I called the assessor's office on February 23 and was told that I could come in (no appointments made) and talk to an assessor. If I wasn't satisfied after that, I could appeal to the board a few weeks later.

• So on the evening of the 23rd I spent a couple hours developing a presentation on my rates and history, valuations of comparable properties that had sold near our home (got from my realtor), listing of my home when it was for sale, etc. By the time I was done, the packet was about 50 pages long (I included a page for each comparable home sold.)

• I visited the assessor's office on February 24th. I had to wait my turn (about 20 minutes) and fill out some mindless paperwork that basically was covered in my presentation. But I completed it, then met with an assessor.

• He was very friendly, but also a bit overwhelmed. I can only imagine the number of people contesting their assessments. He looked at my documentation and commended me on the research and presentation. He also told me something I didn't know -- foreclosure sales don't count in any comparable figures the assessors can review. Yep, you got that right. So while the actual value of my home is way lower because of foreclosures in my area, assessors (and me as well) can't count them when developing an assessed/taxable value for my home. What a rip!

• He told me I would get a response by mail in a week or so and I could appeal that if I didn't like it. On March 4 I got my new tax notice and they'd lowered both the assessed and taxable values by another 1.1%, lowering my taxes by another $37 a year. Basically, they threw me a bone.

Now I had to decide whether or not to fight it with the board. Given the facts that: 1) they were probably going to allow very little changes from here on out, 2) I couldn't count foreclosures in the comparable numbers, 3) the time and effort I'd have to take (time off from work, etc.) versus the savings just wasn't worth it, 4) the timing of the appeal -- it was a day after I planned to be out of town for two days which gave me little time to prepare, and 4) I hope to be moved from this home soon anyway, I decided to stop here and call it a day.

Still I left the process with a bitter taste in my mouth. Sure, I saved a bit and my taxes will be almost $200 lower this year, but they're at least $200 higher than what they should be. I pity the poor people who don't know how to fight back at all and/or don't look at their notices for a couple days and realized they are too late to challenge them. They have no chance at all except to take whatever valuation they've been assigned.

Anyone else out there appealed their real estate taxes successfully (or not)? What happened?

Related: Looks like I'm not the only one with a beef.

Comments

[Bill]

You got screwed by the man. You can't fight city hall...well you can, but can you imagine the response if you tried to appeal (no money blah, blah, blah and you still have to pay...thnaks for wasting yours and our time). You are lucky you got a reasonable assessor, he could have said no way and left you with nothing or worse could have come up with a higher assessment and you'd be left pissed, but with no real option. Appeals boards have no reason to support you over their employees or to cut your tax base.

[dcs]

I thought about it. I live within the city limits of Grand Rapids and believe it or not, they RAISED my assessed value this year. I did know that foreclosures don't count when determining value, and from what I can tell, there have been literally ZERO normal comparable sales in the immediate area in the last six months at least. So, although I am absolutely certain I couldn't sell my house even if I listed it for 20% less than I paid in 2005, I really doubt I would get much off. I'm certain I couldn't reduce it enough to lower my taxable value, so I didn't bother.

[Dan]

You're fighting a losing battle not because you can't fight city hall, but the value of your home doesn't actually matter all that much. If your home value went down, then it's likely that EVERYBODY's home value went down in your municipality.

So let's pretend there's 100 households in your town. You have a nicer home, so you pay 3% of the towns taxes. Your house value goes down, but the town still has expenses that didn't go down. So if you want to fight your tax bill because your home value went down, go right ahead. Even if you win it's a short term gain -- town funds have to come from somewhere.

[Mark B.]

My township dropped the taxable value of my home by almost 20%, hence lowering my tax bill by almost $300. Not bad. They did this automatically, I didn't have to fight it or anything, it just showed up on my statement.

[Matt SF]

I also didn't know that foreclosures weren't applicable to home value. Nice tip.

[Apex]

I agree with Dan on this. I am a bit surprised by FMF and Matt SF's comments indicating that a drop in home values resulted in a drop in taxes due.

For instance, if everyone's house dropped 4% in your municipality it's likely everyone's taxes would go up by the customary 2-3% increase in govt spending (unless your area is able to hold spending at a fixed dollar amount in relation to growing households.)

But regardless of what your govt did with its own spending, if everyone's house went down 10% your current tax bill due for the year should be exactly the same as if everyone's house went down 10%. Taxes are not charged on percent of house value, but rather on your percent of house value in comparison to total house value and then multiplied by the total tax dollars that the city/county/school district budget or passed via referendums.

Now once you get your valuation, if you go get yours lowered and others do not, now you are saving real money, because you are now making your house worth a smaller percent in relation to everyone else.

The only other way lower house values would save you money is if you lived in a neighborhood that depreciated much more than other neighborhoods. For example, if your neighboorhood went down 4% on average and others in your area only went down 2% now you are going to have a cheaper relative tax bill than you did last year because your precentage of the pool is now lower.

Not sure if that all makes sense, but that is how the relationship between valuation and taxes really works when you get into factoring it into a tax bill.

[Apex]

I had a silly typo above where I said if everyone's house went down 10% your current tax bill due for the year should be exactly the same as if everyone's house went down 10%.

That should have said down 10% would be the same as UP 10%. Obviously down 10% is the same as down 10%. :)

[Swamproot]

I have a tiny two bedroom house that I bought for 62500 in 2002. Last year I got a notice that they thought my house was worth 90K. In my small KY town that is outrageous, there is no way that a 2 bedroom house is worth 90. I compiled the comparables and took them in and told the assessor either he is wrong or I am some kind of real estate genius. He agreed with the former and valued it at 72K, which probably is correct given the improvements made. He also took appointments, and was a pleasant fellow.

Saved a couple hundred dollars for a couple hours work.

[Mike Key]

Check to see if there is an actual law requiring you to pay. We had a real tax revolt here a few years ago when it was found out that there was no law on the property tax. Many people didn't pay, so they had to pass a measure, making it law.

But if it's not law, then why are you paying it? Most people just cut checks to the government without ever asking, WHY.

[texashaze]

Tax assessments are just a revenue scheme. Unfortunately it's just a game which doesn't look at reality. Try all you want but it won't work. I tried the old fashioned way for years without much headway. This year I hired a specialist to fight the hike. He didn't help much. The tax officials don't look at this from true house values but how much they need for the budget. Get used to it folks. Sorry.

[Abby]

I successfully appealed an assessment about ten years ago. Our property was assessed as view property when it wasn't. When I met with the assessor it turned out he had not actually visited our house, nor even driven down our (short, dead-end) road. He'd assumed we had a view because other houses in the neighborhood had a view. But our property was in the woods, no view. The assessment for the lot was cut in half (the house stayed the same).
So if there is an error, go appeal. But if you have a difference of opinion over value, good luck.

[Mike Hunt]

The idea of property tax sickens me. So much for land ownership in the US. You stop paying, it's taken from you... out here in Thailand you can own condo's as a foreigner (only Thai citizens can own land) and there is no annual tax on property, just a transaction tax upon buying or selling. Why doesn't the US use that system?

Oh, nevermind, it's because of all the overpaid state service workers and those fat pensions with early retirement...

Free public schools are a nice touch though.

-Mike

[fathersez]

This is astonishing. In Malaysia, we only have a "take it or leave it" choice.

And even more astonishing is that like Bill pointed out reducing this tax reduces the State's tax income, and yet you got a $37 reduction.