Episode Summary:
In this week’s episode, we share how you can and should appeal your annual property tax assessment. If you can do this successfully, you can save hundreds or potentially even thousands on your annual real estate property taxes. Maggie has successfully done this twice, using a 3rd party service and doing it herself. We talk through the step-by-step process, and like all things, you do it yourself or pay a 3rd party service to do it for you. We also share a template you can use for your property assessment appeal.
Episode Notes:
We talk through what property taxes are, how they work, and then share a step-by-step process for appealing your annual assessment. Each year most counties or cities re-assess a property’s value, and this is what your annual real estate taxes are based on. Most years, they assess that your value has gone up, but the increase can often be much higher than actual sale prices. Therefore, you can and should look at comparables of recent sales in your neighborhood and consider appealing the assessment. This is something you can do for your main home or any rental property. The general preparation process is similar in any area, but the specifics of how you file your appeal may vary by county or city.
Like many things, you can hire a 3rd party to do it for you or do it yourself. If you don’t have time, consider hiring a company with a money-back guarantee. If you do have time, do it yourself!
If you use a 3rd party, remember:
- Find a reputable company with a low upfront fee or a money-back guarantee. Ask neighbors and friends in person or through a neighborhood chat group or online group.
- These companies can automate/scale the process we outline below. Once you see what’s involved, you’ll realize they are making a nice mark-up on the service they are offering you.
If you choose to DIY, here’s the step-by-step process:
- First, create a simple spreadsheet with the following columns: address, # of bedrooms, # of bathrooms, square footage, sale date, sale price, and price per square foot. You will fill in almost all of the fields from Zillow and then calculate the price per square foot in excel.
- Document your property’s key statistics of what they were appraising your house at last year and what they are proposing the new appraised amount is for the upcoming tax year. This will be in the assessment letter they mail to you each year, and it’s also publicity available on your county’s assessment website.
- Go to Zillow, map to the area right around where your house is, filter by sold properties within the last 12 or 24 months, and then start looking at those properties.
- You want to find and calculate the price per square foot that recent properties have sold at in your very nearby surrounding neighborhood. Only look at nearby houses within the same zip code or within the few streets right around you. If there are fewer sales, you can go further out, but keep it very close if there are lots around you.
- Start capturing the above properties into your spreadsheet, and see how those comparables stack up against your property’s price per square foot. You want to show that they are overvaluing your home versus what recent sale prices show the price per square foot should be. Some recent sales won’t support your case, but others likely will. You want to find 10-30 comps that support a lower assessed value for your property. Keep the properties that support your case in the spreadsheet, discard the others that don’t support your case.
- Based on the comps you find, suggest what you think a reasonable assessed value should be for your home. Don’t shoot unreasonably low, but feel free to get aggressive and ask for what you think is fair if you have solid comps.
- Follow the instructions included in your assessment letter for how to appeal. Most will allow you to mail in a letter, and many now have an online appeal process. Read those details before preparing the above info, just in case anything is unique about your area’s appeal process.
- Write a simple letter explaining your rationale, and submit it via mail or online. We’ve included a brief template below. That’s it! And then eventually you’ll hear back, or you’ll get your tax bill, and you’ll see if they reassessed it to be lower.
Template for an appeal:
Dear Dekalb County Board of Tax Assessors,
My property (Property ID #XXXX located at XXXXX) has been overassessed for property tax purposes. Please accept this evidence supporting a lower assessment for the property. Each argument has merit in its own right and should be considered separately. This evidence is not an appraisal, and it is not an opinion of market value. I have selected these comparable sales in my very close surrounding neighborhood. I believe my property is eligible for a reduced assessment based on the sales of these comparable homes nearby. The comparable properties I have selected are similar in size and features to my property.
Your current assessment of my property has my average $/sq foot as $XXX. The comparables I have attached show $/sq foot ranges from $XXX-XXX, the majority of which are under $XXX.
Based on the below comparables, I suggest a more appropriate fair market value would be around $XXX,000, which is the equivalent of $XXX per square foot. This is still above almost all of the comparable sales I have found in my neighborhood.
Thank you for taking the time to review my appeal and information. If you have any questions, I can be reached at XXXXXXXX.
Sincerely,
XXXXXXXXX
