Save Taxes: Negotiate A Reduction in Your Assessed Value

This post was written by Marie.

If you own real estate, you have been, or someday will be, confronted with a rise in your assessed property value.  This usually leads to an increase in your real estate taxes!

Increases in your assessed value can sometimes be negotiated downward, saving you tax money.  In some cases, just making a call to the county to ask about the increase will get it lowered.  We made that call one year and successfully reduced the new assessed value.

What is assessed value?

Assessed value is the value that will be used in determining how much you will pay in real estate taxes.  This is different than the appraised value.  Appraised value is determined by someone in conjunction with the purchase of a specific home (usually as part of the mortgage process).  Assessed value is done across every house in the assessment district at legally specified intervals.

Who does the assessment?

Assessments for real estate taxes in the United States are done by the county government of the state in which the property resides, and are governed by that state’s regulations. The county where your real estate is located will be the taxing agent on your real estate, no matter where you live.  So if you own a home in Lawrence KS, it will be assessed by Douglas County under the laws of Kansas.  If you also own a vacation home in Branson, MO, it will be assessed by Taney County under the laws of Missouri.

Typically there is a county office called the assessor’s office responsible for determining equitable assessments for all property in the county.  The assessor’s office is usually not the same office that collects the taxes (yep that would be the Collector’s office).

How is the assessed value determined?

Most state laws require that assessed value be based on the market value of the property.  Market value is determined using sales prices of comparable properties (same size, number of rooms, age, etc); cost of the actual property (if it sold recently); income potential for commercial property and other methods.

What can cause assessed value to change?

  • Improvements (such as a new garage or patio) or deterioration (such as hail damage to your siding)
  • Real estate market movement

How do I know if assessed value has changed?

Most counties will notify real estate owners when a change in the assessed value of their property is taking place – usually early in the year.  A lot of counties are required by law to assess or re-assess at certain intervals (every year, every odd numbered year, etc).  Each county has certain procedures they use to ascertain what the assessed value of real estate should be and to attempt to make sure that all property in their jurisdiction is assessed equitably.

What does an assessment change letter look like?

Typically the letter will come from the county assessor’s office and will state that the assessment is changing, with the old assessment and the new assessment listed in dollars.  It may tell you why the assessed value changed, but probably will not.  It usually will have contact information and a deadline to meet if you wish to contest the new assessment.

What can I do if I get an assessment change letter?

  1. Read the letter and note any deadlines for challenging the new assessment.
  2. Go yell at the dog or find another way to blow off steam so you won’t be emotional when you call the assessor’s office.
  3. Review your assessments and taxes for the past few years – the information will usually be on your real estate property tax bill and/or receipt.
  4. Find your counties government web site and review information on how it does assessments
  5. If you don’t understand why the assessed value rose, call the contact number provided.  Be civil, you are just seeking information at this point.
  6. Based on what you find out about why your value rose, do some research.  If you did an improvement to your real estate and you don’t think the new assessed value reflects it correctly, gather your cost information.  In any event, you will want to find comparable properties and find out how they are assessed.  Many counties now have the assessed values of properties in databases that are available to anyone with internet access.  Just do a search on your county, find the county government site and look for a searchable data base.  Here is an example: http://icare.fairfaxcounty.gov/Main/Home.aspx.
  7. Decide if you have a case to contest the new assessed value.  If so, proceed to the next step.
  8. Armed with your research information, a businesslike attitude and the realization that you really do have to pay taxes, schedule a hearing or a review of your assessed value with the authority or authorities in your county.  In my county, you can choose an informal hearing with the assessor or a hearing with the Board of Equalization.

Remember that assessed values are negotiable, they are merely an informed opinion on the value of the real estate.   Assessed values cannot be specifically and scientifically determined,  If you present reasonable evidence that the assessed value should change and do so in a civil and convincing manner, you may well avoid a real estate tax increase.

Here is information from Tierra Grande, The Real Estate Central Journal that may be helpful if you decide to challenge your next assessment:  http://recenter.tamu.edu/pdf/1228.pdf


Comments

Save Taxes: Negotiate A Reduction in Your Assessed Value — 13 Comments

  1. “2. Go yell at the dog or find another way to blow off steam so you won’t be emotional when you call the assessor’s office.”

    This is too funny but maybe a good way to blow off steam. I love my dog though I don’t know if he can take that. All jokes aside it’s important to understand the factors used in assessment of real estate. You ask, you do your research and be prepared to analyze each and every thing your assessor tells you.

    • June, yes I was joking about yelling at the dog. This is definitely NOT the dogs fault! But it is a good idea to get the emotion out of the way before dealing with any officials.

  2. We have done this, just last year in fact. Considering the assessed value of our home declined, for the 4th year in a row, I was surprised at how willing the city was to oblige. Easy money.

    • @SPF. I too have thought about this. We have been reassessed every year for the last year and it is a pain in the butt. The first time it came back higher and we had to pay more taxes. Then the second year it came back lower and now we are paying less taxes than the increase but still more than when we bought the house. The real kicker is we didn’t even request this assessment; it was done automatically.

  3. Our assessed value has increased a large amount since prior to our purchase of the house. I guess it comes as a dual edged sword- on one hand, its nice to know that the property has increased in value (according to the government anyway), on the other hand, there’s more taxes to pay.

    One tip our notary told us was to make the inside of the house nice, so that the assessor cannot tell, and continue having the exterior look shabby 😉

    • @ Young and Thrifty. That’s an interesting tip. I don’t know if too many people would go for it though. Most people take pride in where they live and like things to look nice on the inside and out.

    • @youngandthrifty – postponing or eliminating outdoor improvements is one way to keep the assessor from increasing value. We took out our concrete driveway as part of a project and never have put it back in – the accessor was one reason. The other was that gravel absorbs more of the rain runoff than concrete and is (we think) better for our environment.

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