The Top Reasons to Appeal Your Property Tax Assessment

There are many reasons to appeal a property tax assessment. Perhaps the most compelling aspect is that unfair or inaccurate appraisals have far-reaching consequences for current and future tax liability, resulting in higher costs for property owners both now and in the long term. If you own property, you should protect yourself from overpaying on property taxes by:

• Protesting assessments with discrepancies or errors

• Ensuring all applicable property tax exemptions have been applied to your assessment

• Confirming that your property's assessed value is in line with similar properties in your neighborhood.

Taking these steps can help you start saving money on your property taxes today. Despite the benefits associated with real estate tax appeal, 74% Americans don't appeal property taxes. If you're unsure about contesting a property tax assessment, unclear about the appeal process, or lack the time to file an appeal, help is available.

Ownwell specializes in property tax disputes, helping you build a successful case and filing your appeal forms, so all you have to worry about is what you're going to do with all those savings.

Understanding Property Tax Assessments

In most areas, residential and commercial properties are appraised annually by a local tax assessor.

To determine your property's value, the tax appraiser considers property characteristics — such as size, square footage, age, and overall condition — as well as the value of nearby comparable properties. When multiplied by the local tax rate, the value of your property determines the amount of taxes you owe. The higher a property appraisal, the higher the tax bill. The assessed value is often lower than a property's fair market value, which is the amount the property can reasonably expect to sell for on the open real estate market.

Since tax liability is figured using property value, appealing inaccurate assessments is crucial.

Why You Might Have an Inaccurate Property Tax Assessment

When your assessment notice arrives, carefully examine the appraisal report to identify errors or inaccuracies. In most states, property owners have a short window in which they can file a property tax appeal, usually 45 days from the date the appraisal is mailed. If you miss the deadline, your assessment appeal will have to wait until the following year.

Common reasons for inaccurate assessments include:

• Property overvaluation

• Record or calculation errors

• Recent changes to the property's condition or market value

• Market shifts are not reflected in the appraisal

• Inaccurate classifications of the property

• Duplication errors

You may also protest a tax assessment if one of your homestead exemptions wasn't correctly applied. An appeal regarding missed exemptions allows you to provide additional information to illustrate why you qualify for tax exemptions, which reduce the taxable value of your property and lower the overall tax liability.

Now, let's examine some common errors or inaccuracies in more detail.

1. Market Shifts: A Common Cause for Overvaluation

The real estate market is notably volatile, and sudden shifts can cause property values to decrease. If your property's value declined due to shifts in the market after an assessment was completed, the property valuation may no longer be accurate. An independent appraisal with lower values, sales, or equity in the neighborhood can serve as evidence that the county property assessment is too high.

2. Inaccuracies in Property Descriptions

Incorrectly recorded information is one of the most common reasons for unfairly high tax assessments. Mistakes often include property characteristics such as:

• Square footage

• Number of rooms

• Age

• Features

Don't let simple clerical or calculation errors from data entry mistakes cost you. Even though it may feel tedious, taking the time to correct property records can result in significant savings.

3. Unaddressed Property Depreciation

If an assessment is based on outdated information that no longer reflects a property's current real estate market value, or if it fails to show recent declines in its condition, the assessment will be skewed. Deterioration, damage, or structural issues should be noted and considered during reassessment.

We recommend using evidence such as photos of property depreciation or repair estimates for necessary work to give a more accurate picture of the property's true value and to strengthen appeals against inaccurate appraisals.

4. Disparities in Comparable Property Valuations

While it's helpful to compare properties of similar size, age, and geographic location when determining valuation, that comparison doesn't take into account the overall condition of individual properties. So even if your property shows signs of depreciation, an assessor may assign it a higher value assessment because surrounding properties are valued at a higher rate.

Although the neighbor's house might sell for that amount on the free market, yours might need significant repairs or updates to garner the same selling price. Disparities in comparable property valuations can lead to inflated assessments.

5. Equity Comps (or Unequal Appraisal) vs. Sales Comps (or Market Value)

Property tax assessors use different methods to determine valuations. The goal of both methods is to provide a fair and accurate tax assessment:

• The equity comparable method compares your property's value to similar properties in the same area to ensure fairness.

• Sales comparable rely on the sale prices of comparable properties to estimate your property's market value.

Using both the equity comparable (comps) method and the sales comps method together provides a more comprehensive understanding of a property's value. The equity comps ensure fairness by comparing your property to similar properties in the same area, considering local market conditions and property features.

Meanwhile, the sales comps offer a concrete basis for valuation by looking at actual sale prices of comparable properties, reflecting real market transactions.

6. Recent Purchase Price vs. Assessed Value

Property appraisal overvaluation occurs when there is a significant discrepancy between the assessor's value estimate and the actual free market value, especially when compared to recent sales of similar properties. When the market value of a property falls below an equity comps-generated appraisal, the appraised value can become artificially inflated.

Your property might be overvalued if recent sale prices in your neighborhood indicate that market values have declined. Nearby comparable properties that suddenly sell for less than their previous market value are a sign that the market has changed and that you should file an appeal.

7. Inconsistent Estimates Compared to Similar Properties

Inconsistent valuations between similar properties in the same neighborhood are also problematic. When your neighbors receive lower property value assessments, but your property is valued higher, you're probably overpaying on your property taxes.

In some cases, an assessor may base your property's value on comps for a property that is significantly different from yours or that is even located in a taxing district with different market conditions. This type of comparison between dissimilar properties can result in an assessment that is too high.

8. Inclusion of Non-Existent or Unowned Assets

An inaccurate classification of your property type or the inclusion of assets you don't own can cost you. For example, unfinished square footage that's recorded as finished property leads to higher taxes. Similarly, a single-family property listed as a multifamily unit or the inclusion of outbuildings that no longer exist adds up when it comes to property assessments.

9. Errors in Duplicate Valuations

Duplicate tax charges are more common than people might think, especially for mixed-use properties. Watch for values that overlap or double, especially when real and personal property are assessed together or when one property enhances the other's value and gets taxed twice.

A mixed-use property, like a home salon or residential home business office, can lead to duplication valuation errors. A property tax professional can give you insights about property taxes to help you better understand the extent of your personal and business tax obligations.

Deadlines and processes vary by state and even between counties in the same state. For example, compare key differences between tax appeal assessments in California, New York, and Texas.

Frequently Asked Questions

What common mistakes lead to an overassessed property tax bill?

Ignoring shifts in the market, inaccurate property details, unaddressed depreciation, and disparities in comparable property values can all lead to inflated tax liability. Additionally, the inclusion of non-existent assets and duplication errors on a property tax assessment document results in overassessed property tax bills.

When should I file an appeal for my property tax assessment?

Check with your local municipality to find out the deadline for filing a property tax appeal. Most jurisdictions require the written appeal paperwork to be filed with the local assessor's office within 30-60 days of receipt of the property appraisal notice. If you miss the deadline, you'll have to wait until the following tax year to protest.

How can appealing my property tax assessment save me money?

Since your property appraisal is directly tied to your tax liability, appealing inaccurate or unfair assessments helps lower your tax bill by reducing the value on which your taxes are based. Applying for and ensuring you receive all qualifying tax exemptions also saves you money by lowering the assessed value of your property.

Trust Ownwell's Experts to Help Lower Your Property Tax Burden

Ownwell simplifies and manages the appeals process for you. From gathering evidence to filing the appeal paperwork, our team of experts saves you 31% more than our competitors. There are no upfront costs, and you only pay if you save. Save on your property taxes in three minutes or less. Pay less, save more, and reduce your property taxes with assessment appeal services from Ownwell.