Help with Property Tax Appeal

[Cobra9777]

My first challenge was made since i didn't think that the real estate commission and other items (taxes, inspections and ect) should be figured in on Fair Market value. Oklahoma Fair market value is what you wrote the check for. I didn't win my appeal but they told me if I had wrote two checks one for house and another one for the RS commission I would be correct. I don't know if you could negotiate that deal but will try the next time i buy a house...

I tried that strategy when we bought our current house 16 years ago. The taxable appraised value had been well below FMV for many years. Then, right after the sale, it increased significantly to almost exactly the price we paid. I appealed, arguing that $30K of the sales price was not for real property. It was for real estate agent services (commission) and for some personal property such as a spa, lawn tractor, and appliances that were included with the sale. They are only allowed to tax the value of real property.

In theory, they accepted the argument but then asked if I had a mortgage. I said yes and they asked to see a copy of the appraisal to see if it supported my argument about the FMV of the real property. Well... it didn't. So I told them I didn't have the appraisal and that, in any case, the best measure of FMV was the arms-length deal between buyer and seller, which in this case included items other than real property.

Without rejecting that argument, they simply did their own comp-based estimate that supported the gross sales price. They correctly surmised that we would not have been approved for the mortgage without an independent appraisal that supported the gross sales price, regardless of the value of personal property or the realtor commission.

I think the official paperwork could have easily been structured to exclude the personal property, which we could have paid for with a separate check. But I'm not so sure about realtor commission and possibly other closing costs. I'm not sure how that would work.

 

[akck]

I appealed once. My basis was that my neighbors property tax assessment went up by 1-2% while mine went up by 5% or something on that scale. Granted, I didn’t use a neighbor down the street whose assessment went up by 7% as an example. They came back and reduced ours to be more inline with the neighbors saying they used the wrong model on our property.

 

[Just_Steve]

There are companies around me that will do your appeals for no upfront cost.

"For example, if we succeed in getting your assessment reduced so that you save $3,000 a year in property taxes, our fee would be 50% of $3,000 = $1,500. You would continue to save the full amount year after year after year."

 

[Ronstar]

We had our tax appeal meeting this morning. First part of the discussion was to verify and correct our property record. Assessor made several changes to our record, one of which reduced our construction level from above average to average. That alone could save 20%.

Then I stated my case that our assessment was too high based on the comparables. The assessor noted that the full board will review the request for any further reductions and contact us with their findings.

 

[CRLLS]

Assessment values of properties are public knowledge and can be found pretty easily. Put together a list of similar homes with names, addresses and tax ID's. Then show yours against theirs. If you can find a comparable that is owned by a assessor board member or city council member, you stand a better chance of winning. Or so I'm told.

I did not go thru a formal appeal but did contact my assessor's office some years ago. The home had structural defects to the tune of $25K to fix. I didn't complain about the value of the house if it was in saleable condition. But I did request that they reduce the assessed value by that equivalent. They agreed and reduced the assessment accordingly. I had the defect corrected and got the tax benefit for another 5 years.

 

[MI-Roger]

I have appealed twice and won both times. Not a huge reduction either time but a reduction nevertheless. My advice:

1. In some communities the members of the Appeal Board may include community volunteers. Treat everyone with respect.
2. Arm yourself with facts, rather than just an opinion. Have copies of your facts to leave with the Appeals board
3. Stay calm and professional.

I know a guy who appealed the evaluation increase of his home following construction of a Pole Barn.
His argument was that since he lived in an agricultural area, the new pole barn at his residence should be treated as a farm building, not like a detached 6-car garage (which was how he was using it). That his increase was unfairly assigned strictly because he pulled a Building Permit, and that un-named others never pulled a permit or received a tax increase. When his appeal got denied he responded with anger and a statement that "By God, I sure am glad I never pulled a Permit when I finished the basement in our house!"

To which the Assessor answered, "So, your basement is now finished? That is not shown on the tax records for your home."

LOL

 

[jazz4cash]

Assessment values of properties are public knowledge and can be found pretty easily. Put together a list of similar homes with names, addresses and tax ID's. Then show yours against theirs. If you can find a comparable that is owned by a assessor board member or city council member, you stand a better chance of winning. Or so I'm told.

I did not go thru a formal appeal but did contact my assessor's office some years ago. The home had structural defects to the tune of $25K to fix. I didn't complain about the value of the house if it was in saleable condition. But I did request that they reduce the assessed value by that equivalent. They agreed and reduced the assessment accordingly. I had the defect corrected and got the tax benefit for another 5 years.

Interesting...My neighbor is a county council member and has a favorable assessment compared to me. I’ve considered how I could use this fact but I’m not sure how. I did include their address on my list of comps. It seems the homes in our block increased by 17% in three yrs but other subdivisions in the area only increased by ~10% including homes used for comps on my last refi appraisal.

I’m going to select a telephone interview so I can hopefully add detail as needed. It’s the State that reports the assessment but the county hears the appeal

 

[Ronstar]

I used to work with county agencies in creating geographic information systems, tax maps, and other applications. As part of our QA/QC we would cross check our digital map to make sure that our map had the same tax id numbers as the county file. An interesting thing happened when we flipped the check - checked the county tax database to see if they had the same tax id numbers as we had. We found dozens of privately owned land parcels in the county that had no tax id numbers and were not paying any taxes - and for several years - maybe forever.

Another thing - we ran a cross check to see if the county's school tax code for all parcels matched the tax code for school district polygon from our map. We found dozens of properties in expensive school districts that had school district tax codes for a less expensive school district. So their tax bills were thousands of dollars less than they should have been.

 

[jazz4cash]

I received the "Worksheet" and "Area Sales Report" for our property. The sales report is a single home which sold last month and should actually support a much lower appraised value for our home but I think the data for that home is all messed up. Ironically it is the same home used as a comp for my refi which could not support a no cash out refi on our property!

They actually have a lot more data than I expected. The sq footage is broken down by # of stories w/ and w/o basement, garage, deck area, etc, etc. The dimensions for the deck are off by 20% but that won't have a big impact.

There are 2 "wild cards" (neighborhood adjustment and county multiplier) that raise the calculated assessment by 50%! These adjustments are obviously WAGs that cannot disputed.

Now Im waiting for sales reports and worksheets for several properties that should justify a reduction in our assessment.

 

[nvestysly]

I've been through this process in two different states. Based on that, and what I've read in this thread, the tax appeal process varies by location. Be sure to understand the process your tax appraisers use in your locale. There's no need looking up information on Zillow if the appraiser doesn't accept that information.

In our area the county performs the appraisal/assessment process. They have very specific criteria and of course there's an "algorithm" that cannot be explained (or at least not divulged). But my point is... I must follow their criteria regarding sales date, geographic area (i.e. neighborhood), etc.

For example, we contested our appraisal/assessment in 2019. The data the county uses is sales comps in 2018. So there's no use bringing "recent" sales data - only sales data in 2018 was accepted. Similarly, our neighborhood is defined as the geographic area north and east of our intersection. There was no sense in my including data from a home across the street (to the west) because that was not considered part of my neighborhood. Our appraiser(s) have been relatively reasonable in the past but they insist we use the sales period and neighborhood they use or the data is considered non-applicable. Only if no sales data is available for the time period under consideration, or for the neighborhood under consideration, do they permit use of substitute data.

Similarly, they want you to use comps that are similar square footage, similar construction, similar quality, similar features, similar land size, etc. The algorithm they use accounts for variations in these parameters but our county tends to dismiss my rationale the more it diverges from the norm they utilized in their determination of value.

I do seem to get away with "cherry picking" certain properties. Assuming I can identify a reasonable number of properties (3 to 5) that meet the sales period, neighborhood, and other parameters, I use the properties that meet my desired result and omit the properties that don't meet my goal of reducing the assessment.

One more thing... if there are any features about your house that may minimize its sales price be sure to mention those factors. Such as: you have old windows, other houses have replacement windows, your roof is 20 years old, other houses have new roofs, your driveway is cracked, others are not. Things like this add another factor (subtract value of the property) to the equation under the category of deferred maintenance.

 

[Another Reader]

I purchased my home in California 13 years ago, and decided to appeal my property taxes about 8 years ago. Property values had dropped sharply, yet my taxes kept climbing at the maximum allowed percentage.

I applied online and paid the $40 application fee. I submitted 3 comparable properties that recently sold on my street for far less than my property assessment. The property tax assessor’s office does several things to discourage you, like saying they may even raise your property taxes if you appeal. Then, they returned my list of comps, saying I need to keep it for the “court hearing.” After 6 months, DH inquired about our case and we were told we were “in the queue” and needed to wait. After one year, we received a letter from the assessor’s office saying they agreed with our property assessment and lowered our property taxes by $3,500 plus credited us with another $3,000 retroactively. The best thing was that it re-sets our tax basis in future years since in our state of CA they can only raise it by 2%. Success!

Some of what you state is not accurate. If you bought the property 13 years ago and received a reduction 8 years ago, the base year value (value at the time you bought the property) was not changed. You would have received a temporary reduction to market value. Every year the reduced value is compared to market value. If the market value increases, your assessed value will also increase. There is no two percent limit in this situation. The maximum value is the indexed base year value, the value at the time you bought the property, plus a two percent compounded increase for each year since you purchased the property. Your tax basis was likely NOT reset. It is only reset if you successfully argue that the value set as of your purchase date was incorrect. However, there is a statute of limitations on base year value changes of four years.

The reason that it took so long for them to resolve your case is that during the downturn thousands of appeals were filed but the staff at the Assessor's Office and the Clerk of the Board of Supervisors Office (processing office for appeals) was not increased. Assessor staff was likely reassigned from reviewing changes in ownership and new construction to the appeals task, but with thousands of appeals, the process is slow.

Most Assessor's Offices try to resolve cases like yours without a formal hearing. They do this through the stipulation process, where you and the Assessor agree to a value and the Assessment Appeals Board rubber stamps the agreement. That's why you were told that the appeal would be heard and when the Assessor representative agreed with you, you received a stipulation form instead.

 

[pb4uski]

.... There are 2 "wild cards" (neighborhood adjustment and county multiplier) that raise the calculated assessment by 50%! These adjustments are obviously WAGs that cannot disputed. ...

Are these adjustments consistent between your property and other properties in your neighborhood?

 

[troutnut1]

Well are they right or wrong?

What is really boils down to is whether your new assessment is right or wrong. Percentage increases, or that it “shot up”, is normally meaningless. For instance, if it were 50% too low for ten years, and then the error was discovered, a 100% increase would be perfectly appropriate.

Figure out what your home was really worth as of the statutory “lien date” or date of appraisal (not today). Compare that with their number. If their number is lower, keep your mouth shut.

If theirs is higher, squawk like crazy. Normally there is an informal level of appeal that is pretty easy. Followed by appeal processes that are increasingly complex. The assessors job is to get the numbers as right as possible, not as high as possible. But it is mass appraisal, and only humans doing it. Assume they are friendly and reasonable until they prove otherwise. Be nice and ask a lot of questions.

It would also be wise to figure out quietly what they have on record for your home and outbuildings characteristics. As someone else mentioned, during an appeal it is not uncommon for them to find out about additions, improvements, finished basements, new or improved outbuildings, etc. You may or may not wish to invite such scrutiny. Figure that out in advance. I have seen many tax appeals end up in the value increases when new discoveries were made.

 

[jazz4cash]

Are these adjustments consistent between your property and other properties in your neighborhood?

I’m waiting to receive the worksheets for the comps that I selected to determine that answer. It costs $1 per address to get copies of these records.

Another thing that stood out is a deduction on the worksheet for “normal depreciation” which is 15% for a 20 yr old house and I have no clue how they arrive at that figure.

 

[troutnut1]

Depreciation of a building is normally calculated based upon the year built, the effective age, and the remaining economic life. Of those three, the “effective age” is the one appraisers are most likely to get wrong because it takes into consideration the care and maintenance that the building has received.

Like our members, some at 65 are in far better shape than others. So a really fit 65 year old might have an effective age of 55. And someone who drank and smoked a lot might have an effective age of 75.

Because this is somewhat subjective, and based largely upon a physical inspection that may not have happened, effective age is the most likely to be wrong. But nothing obvious stands out to me about 15% (85% good) on a 20 year old house (unless you’ve taken horrible care of it).

If it comes to a face to face meeting, your appraiser assessor should be able to explain this in more detail.

 

[jazz4cash]

What is really boils down to is whether your new assessment is right or wrong. Percentage increases, or that it “shot up”, is normally meaningless. For instance, if it were 50% too low for ten years, and then the error was discovered, a 100% increase would be perfectly appropriate.

Figure out what your home was really worth as of the statutory “lien date” or date of appraisal (not today). Compare that with their number. If their number is lower, keep your mouth shut.

If theirs is higher, squawk like crazy. Normally there is an informal level of appeal that is pretty easy. Followed by appeal processes that are increasingly complex. The assessors job is to get the numbers as right as possible, not as high as possible. But it is mass appraisal, and only humans doing it. Assume they are friendly and reasonable until they prove otherwise. Be nice and ask a lot of questions.

It would also be wise to figure out quietly what they have on record for your home and outbuildings characteristics. As someone else mentioned, during an appeal it is not uncommon for them to find out about additions, improvements, finished basements, new or improved outbuildings, etc. You may or may not wish to invite such scrutiny. Figure that out in advance. I have seen many tax appeals end up in the value increases when new discoveries were made.

Thanks for the feedback. The state assessor's website says they cannot increase the assessed value based on the appeal. Obviously if they find some value that was missed it will impact the next assessment cycle. As it is right now, their records indicate that our deck extends over onto the neighbor's property.

 

[jazz4cash]

I got the results today. I now own the cheapest home in the subdivision. The reduction was 7%. I’m very happy about this. Should save me about $600/yr.

 

[Doribe]

I appeal my taxes on a regular basis. I use the assessors information, not Zillow or anything like that. I check houses with the same size lot and same same or similar square footage, number of bathrooms, etc. I only lookin a two block radius of my house. I find three examples of lower assessments. The last one I submitted on-line. I've hired a lawyer in the past, they usually want one years of the savings.

 

[jazz4cash]

While researching the process I requested to be contacted by one of those law firms that specialize. I never heard anything. Could be because they checked our assessment and decided it wasn’t worth it for them.

 

[jazz4cash]

I actually overstated my savings. It’s more like $200 in the first year, $400 in the second, and $600 in the 3rd due to phase-in of the new assessment. That $600 should be reflected in all future assessments but I’ll need to get a copy of the new worksheet to see exactly how it is revised.