Are Your Property Taxes Too High? You Can Appeal Your Assessment

Do you think you pay too much in property taxes? It’s very possible you do.

Up to an estimated 60% of U.S. properties are overassessed while fewer than 5% of homeowners appeal their assessments, according to the National Taxpayers Union Foundation (NTUF).

However, the majority of those who properly appeal their assessment end up lowering their tax bill. Here’s how.

What is a property assessment?

The assessed value of your property determines how much you pay in property taxes.

Assessments get carried out by local jurisdictions, with assessors reviewing property data, doing a comparative market analysis, home inspection findings and, in some cases, visiting the house to arrive at the value. (It should be noted this assessment value is for tax rate purposes and not necessarily how much the property would be listed or sell for.)

In many places, property tax assessments are done annually. In others, they can be conducted every three years or when the property ownership transfers.

Don’t stress if you’re overassessed

An estimated 30-60% of U.S. properties are overassessed, according to the NTUF.

Overassessments lead to higher property taxes for the homeowners and are more common amongst middle- and lower-income borrowers. Despite how common overassessments can be, fewer than 5% of taxpayers appeal their assessment, the NTUF claims.

“I can’t tell you how many homeowners I speak with that are up in arms about their tax bills,” said Craig Berry, branch manager at Acopia Home Loans and loan expert at The Mortgage Reports. “They love their property value but loathe the amount their property is being assessed.”

It’s likely many homeowners don’t know they can challenge a property assessment or how to do it. However, the majority of those who appeal their assessment properly end up lowering their tax bill. Similarly to dealing with appraisal gaps, you can take action and the NTFU offers a checklist to follow.

Third party companies also offer reassessment services with the goal of lowering your property taxes. Typically, these companies only get paid if they’re successful and fees vary by vendor. Some charge flat fees, but most charge a commission rate that’s based on a percentage of the savings, Berry explains.

“We review properties for free, any commercial or residential property in the country,” said Alison Tulio, president at Incenter Tax Solutions. “If we determine you’re overassessed, we’ll handle the entire process for you and then we only get paid if we win. So it’s 50% of whatever we save you for the first year. It’s a one-time fee.”

The third party assessment appeal process

If you want to try and lower your property taxes, assessment appeals have annual deadlines that vary by location. If you decide to employ a third party company to carry out the appeal process, here’s about what you can expect, according to Tulio:

“We do the initial property review and determine if they’re overassessed. If they are, we tell them what their likely savings would be. If they want to move forward, they sign a contract, and then we take it from cradle to grave: submit all the paperwork prior to the deadline, attend the hearing if there is a hearing, negotiate with the municipality, whatever is involved. Sometimes you need an appraisal and we coordinate that. It’s really stress-free for the homeowner. Once we have a property in our system, we’ll review it for the homeowner every year.”

Tulio also recommends that home sellers review their assessment before putting their home on the market.

“If the seller can get the property taxes reduced, they can put that on the listing and it just opens them up to more buyers. A lot of buyers are boxed out because of the property taxes,” she said.

The bottom line

If you suspect you’re paying too much in property taxes or think there’s a possibility to lower them, there’s action you can take.

Reach out to a local mortgage professional and discuss if a property assessment appeal is the right approach to take and what the best process is for you.