What Is Property Tax?
Property tax is a yearly charge levied by your local government based on the estimated value of your property. This tax money goes towards funding essential services in your community, like schools, roads, and police and fire departments.
How Are Property Taxes Calculated?
Property taxes are calculated by multiplying the tax rate (in decimal form) by the assessed value of your property. The assessed value is an estimate of your property's market value, determined by a local tax assessor.
Here's an example: if the tax rate in your area is 1.1% and your home's assessed value is $200,000, you would pay $2,200 in property taxes per year (1.1% x $200,000 = $2,200).
Property taxes vary greatly by state and even county. Some areas have low rates, while others are much higher. For example, New Jersey has the highest property tax rate at 2.2%, while Hawaii has the lowest at 0.37%, according to ATTOM Data Solutions. The average American homeowner pays a tax rate of 1.1%.
How to Protest Your Property Taxes
1. Know the Rules
Typically, local governments send out assessment notices to homeowners in the early months of the year. Upon receiving yours, promptly check the deadline for disputing the value. Timeframes can be tight, sometimes just a few weeks. Also, familiarize yourself with how your area assesses property.
2. Appeal Your Property Taxes Every Single Year
It's essential to file property tax appeals every year, regardless of past outcomes. Consistent efforts can boost your chances of success over time.
3. Stick to the Deadline3
Property tax bills are typically sent out in October annually. As such, resolving any appraisal inconsistencies should be addressed well in advance of this deadline. Once Notices of Appraised Value are sent in April, property owners have until May 15 to submit their protest. They have 30 days from receiving the notice.
4. Check for the Property Tax Breaks You Deserve
Upon receiving your property tax bill, meticulously inspect it for your tax rate, assessment figures, and payment schedule. Ensure that all entitled reductions are clearly itemized.
Certain states offer various tax breaks for homeowners residing in their primary residences. Eligibility for these credits may depend on factors such as income level or status as a senior citizen, veteran, or disabled individual.
For instance, in Florida, homeowners can benefit from a homestead exemption of up to $50,000. Additionally, individuals aged 65 and above who meet specific income criteria can claim an additional $50,000 exemption.
5. Check Property Tax Rates on Comparables
If you're contesting your property tax due to unequal appraisal, get data on the appraised values of similar properties. This step is crucial if you suspect your property was assessed unfairly. This is especially true if the gap is over ten percent of the median level of appraisal.
6. Gather Evidence and Build Your Case
Success at the official hearing demands preparation. Present your property's purchase price with a sales statement; evidence is your ally. If your figures undercut the valuation, victory is within reach. Gather neighborhood sales data for added support. Simplify your task by enlisting a tax consultant; they'll assist in evidence collection and advocacy on your behalf.
7. Choose the Right Kind of Review Panel
Choose wisely between review options. Homeowners can choose in-person or remote phone hearings. But, there's a less known option: picking a single-member ARB instead of the usual three-person panel.
Telephone hearings lack certain dynamics. But, they are still better than missing the session. When it comes to panel composition, having a single member can offer benefits like avoiding groupthink.
8. Consider a Professional Appraiser
Hiring a seasoned professional to manage your property tax protest brings numerous advantages. Their wealth of knowledge and experience not only saves you time and energy but also alleviates stress. With years of expertise in the field, they can craft a solid case, significantly boosting your chances of a successful appeal.
Challenging Property Taxes FAQs
1. When Will I Receive My Property Tax Appeals Results?
Unfortunately, there's no one-size-fits-all answer. The wait time for property tax appeal results varies depending on your local jurisdiction's workload. It can range from a few weeks to several months.
2. If I Win a Property Tax Appeal, When Does It Change My Mortgage Payment?
Winning a property tax appeal won't lead to an immediate change in your mortgage payment. Typically, adjustments to escrow accounts holding property tax payments happen annually.
3. Are You Allowed to Miss Your Protest Hearing?
If unable to attend your protest hearing due to work commitments, family responsibilities, or other circumstances, you can still participate by filling out an affidavit, getting it notarized, and mailing it in certified with a return receipt. The appraisal district will honor it, and a hearing will be held without your physical presence.