Property taxes vary widely from state to state and city to city. In some locales, property taxes make up for a state’s lack of an income tax, but in others, they’re high in spite of a state’s claim on the fruits of your personal labor. Even if you’ve paid off your mortgage, the property taxes continue, and in all but the rarest of cases, property taxes consistently rise over time. But there are legal and legitimate ways you can reduce your property taxes.
- Review your rate card
- Don’t make improvements
- Know the cost
- Scale back on the landscaping
- Know what your neighbors pay
- Welcome your tax assessor
- Let the assessor know what’s wrong with your home
1. Take a trip
Head down to the tax assessor’s office and request to see your property tax rate card. The property taxes you pay is public information and your rate card should be readily available to you. The card will have information about the size of your lot, the dimensions of your rooms, and the number and type of fixtures located within the home. It may also include information on any special features that could increase your property tax, such as a pool, a detached garage, or notations about any improvements that have been made.
When you review your property tax rate card, scour it for potential discrepancies. My property tax increased a substantial amount (doubled) one year and my wife marched down to city hall to find out why. Somehow, our information had merged with another homeowner’s – one who’s home was twice as large, was on a lot 8 times larger, and had a pool house. The clerk laughed about it saying, “Oh, that happens all the time.” I didn’t think it was too funny.
2. Get content
Hold off making improvements to your home in the months before it’s assessed particularly if those improvements will require building permits. Improvements could increase the value of your home and thereby, increase the amount of property taxes assessed on your home.
3. Know what improvements WILL cost
If you just can’t avoid making improvements, it’s best to know what those improvements will cost you ad infinitum in property taxes. A simple call to your tax assessor or building official and they will be able to give you an idea of how much an improvement will add to your property taxes.
4. Cut the flowers
Though tax assessments are strictly controlled by formulas and specific criteria, these are human beings conducting an “assessment” on your home. If your green thumb goes crazy (like mine), be aware that pretty homes generally get a higher assessed value than plain homes.
5. Spy on your neighbors
Since your property tax assessment is public knowledge, so is your neighbor’s! Investigate what your neighbors are paying and if your home is assessed at a higher rate, try to find out why. If you have a 3 bedroom 2 bath home with a basement garage and an assessed value of $315,000 but your neighbor has 4 bedrooms 3 baths and a basement garage with an assessed value of $275,000, you have every right to know why. Ask. Then ask for a re-assessment for you (not your neighbors!).
6. Let him come on in
If your property tax assessor wants to tour you home, by all means, let him or her in! Refusing to allow an assessor inside you home could result in your home being assessed at the highest possible rate. In many cities, this is standard practice because there is an assumption that you’ve made improvements that you don’t want the assessor to see.
7. Sell your home’s bad side
Walk around your home with the assessor if possible. When you do, point out any negatives about your home. Typically, a property tax assessor will only notice your new flooring, refinished cabinets, and fancy new front door. He will probably overlook the cracked foundation, the aging roof, and the unusable fireplace. Those negatives should be considered to get a fair assessment.
Challenge your property tax assessment
If you’re convinced that your property tax is too high, ask your assessor’s office what steps you have to take to challenge your assessment. Most offices have a formalized process with forms and step by step instructions.
The bottom line on property taxes
Don’t make your home look like a dump just to save a few bucks on your property taxes. There is a certain sense of balance between making your home look nice and saving money on your property taxes. Time your improvements, walk your home with the assessor, do some research at city hall, and challenge anything you feel is unfair. You can take control of your property tax situation!
Photo by eron_gpsfs
Note: This article was included in the Carnival of Personal Finance: The origin of the piggy bank at Well Heeled Blog.