Time to Send City Hall a Tax Bill?

by : Josh Sloan

Since we are repeatedly told that some of the value has dropped from our homes, doesn't it stand to reason that most of us should be in line for a rebate on our property taxes? Isn't this how the City Hall works?

Of course, it is unlikely that this idea will be sent to you in a letter written from the local City Hall Property Taxation Department. They only write when they want to send a bill! In order to qualify for a rebate, you must actually write an appeal, listing your reasons.

Taxes are usually made from three components: the property value; the ratio of that figure that the local council will tax you (it differs from 10% to 90%); and the City's tax rate. This last figure also varies wildly in different parts of the country.

For instance, rates can span from $3.75 per $1,000 of 100% of the assessed value of a house in Honolulu, Hawaii, to a much higher rate in Providence, R.I. There you will pay $29.65 per $1,000 of only 50% of the assessed value of the property. You will need to find out your exact rate to check the calculations correctly.

According to the American Homeowners Association (AHA) there are often errors in home owners' tax bills which stem from simple clerical errors. If you think you may be a candidate for a lower tax assessment on your property, review the following checks.

Is your property listed correctly on the bill? For instance, if your condo is recorded as a single family dwelling, it is an error which needs adjustment. Have you had some neighborhood adjustments which will reduce the value of your home, for instance: re-zoning, drainage problems, new freeways or easements?

Has your home suffered some depreciation which will reduce its value, for instance structural damage, bad heating or cooling systems, or a decaying deck?

Another factor that will affect the taxable value of your home is the current financial situation in the USA. This has nothing to do with your home in a personal way, but it has to do with the depreciating value of the entire real estate market, which includes your home.

In these troubled times of foreclosure, many neighborhoods have seen a foreclosed home on their streets. Foreclosures actually affect the value of other homes in the neighborhood as the foreclosed home will inevitably sell for less money than the original purchase price. This is one factor that will affect the value of your home; the other is a nationwide problem.

Nationally, the price of homes has dropped and although some areas are worse hit than others, very few have completely escaped the guillotine of the falling and failing economy. So even if there are no foreclosures in your immediate neighborhood, the national realty climate will certainly have reduced the value of your home.

Therefore, whether similar homes in your neighborhood have sold for less than their appraised value or not, you may have a case. It may also be a good idea to check other similar homes nearby and see if their appraised value has risen or fallen much over the years.

If you can find a half dozen homes who have a lower assessment, then you stand a better chance. Also ask a realtor to list out a few homes like yours that have sold for less than their expected asking price. If there is an administration fee to pay for this investigation, it may be worth it.

The American Homeowners Association has reported that as many as 50% of the people who do appeal their taxes are successful. However, you have to act within a certain period of time - anything from 14 days to 90 days after receiving your bill. This, again, depends on your own area.