With the housing market getting worse we thought we’d catch a break on our property taxes. We thought surely our property taxes would be lower, right? Wrong. Luckily, it turns out you can fight City Hall, or at least your country appraisal board. We were able to successfully lower our property taxes by preparing our case and presenting it at an informal hearing – this was actually us showing up at the office and talking with one of their staff in her cubicle for about five minutes; a very low-stress process. Our particular experience was in Travis County, Texas, but much of this applies universally. Property-tax bills are based on two things: your home’s assessed value and the local property-tax rate. Thus, to lower your property taxes you need to concentrate on reducing the value your appraisal district places on your home (likely) or reducing the tax rate your school district, city, county, EMS, or other taxing authority charges (not very likely). First, I’ll share what we did to lower our property tax bill. Then I’ll discuss other ways to lower your property taxes and options for paying your property taxes.
Gathering Evidence
1. We learned which factors affect our home’s assessed value. The following documents can sometimes provide evidence of market value:
Settlement statements from sale (current year)
Appraisal reports
Current listing agreements
Recent purchase offers
Interior and exterior photos of the property
Construction plans, surveys, floodplain information
2. We checked our property tax notice for obvious errors about our house such as incorrect year built, square footage, condition, or lot size. Everything was correct.
3. We compared the assessed value of our house with assessments on similar homes in our neighborhood. This was easy since the information is public and our county tax assessor has a web site where we were able to get the information online. We made sure we looked at houses with similar square footage and built within two years of when our house was built. We found several houses with lower assessed values. Interestingly, we also found a few larger houses built around the same time as ours that had lower appraisals. Hmmm.
4. We obtained comparables – sales of similar homes in the last six months. It helped that our neighbor is a realtor. This information enabled us to show that houses similar to ours were not selling at lower than their appraised value.
There are other things you can do to lower your property taxes and I’ll get to those shortly. The information we had compiled at this point was all we had. Armed with our comps and the county appraisals of similar houses, we met with the folks at the county appraiser’s office. We were surprised to learn that the values are set using the previous year’s data, so the current year’s market meltdown wouldn’t be affecting the appraised value until next year. Bummer. But, we did learn that they use two methods to appraise houses each resulting in a different number. We can’t prove this, but we suspect they always go with the higher number unless someone challenges the property tax. Then they give you the lower value. We also learned that we can request a taxpayer sales evidence packet each April that will arm us with all the data the county used to assess the value of our house. We can then dispute their data with data of our own each year if necessary.
If after the informal meeting you still aren’t happy and have lots of data (which we didn’t) you can request a formal hearing. You can also engage an attorney, but make sure the potential property tax reduction will offset the legal cost.
More Options for Lowering Property Taxes
5. If you recently bought your house for less than the county’s appraised value or if you have a recent (within the past six months) appraisal showing a lower appraised value of the house than the county’s value that will help get your property taxes lowered.
6. Are you missing any deductions that will lower your property taxes? Are you disabled, a senior citizen, a veteran, or a low income homeowners? Did you remember to take the homestead exemptions? Does your home (or office building for that matter) qualify as an historic or energy-conserving building? Make sure you include all the breaks you can to lower your property taxes.
7. Is your property agricultural? If so you are entitled to a property tax break.
8. If you believe you were wrongly denied an exemption you can take that up with your appraisal review board.
9. Which units are taxing you? Your property tax notice will list each taxing unit. If you do not recognize a taxing unit, inquire. Each unit has its own rate and if you are being taxed by an incorrect unit (say you live in Austin, TX, but are being taxed by the Dallas Independent School District – oops) you’ll want that corrected.
10. You can always speak during public hearings when your elected officials set tax rates and you can gather your fellow taxpayers and try to fight rate increases.
11. Pay attention to rollbacks. If a taxing unit adopts a rate that exceeds the rollback rate, you can petition for an election to reduce the rate. Your local tax appraisal board will have information on how you can organize this.
Paying Property Taxes
Do not refuse to pay your property taxes if you disagree with the amount you are charged or if you are unable to get your taxes reduced. You’ll end up with penalties and interest and might even be sued. If you cannot pay your property taxes all at once, you may be able make partial payments or work out a payment schedule. You could also pay with a credit card, but that would not be ideal since you would have the interest charged by your credit card company plus a likely convenience fee charged by your county appraiser for paying your property taxes by credit card.
To ensure you are able to pay your property taxes put aside an amount each month that is at least equal to 1/12 of the total property taxes you paid the previous year. If you financed your house, your lender may have an escrow account established and may include an amount for property taxes in your monthly mortgage payment to ensure timely payment of your property taxes.
If you are able to pay your property taxes you can still save money. If you pay your property taxes in the current year you can claim the federal income tax deduction. That will take some of the sting out of paying. Some taxing districts offer a discount if you pay your taxes earlier than when they are due. Contact your local taxing authority for particulars.
