Lowering Your Property Taxes (2024)

While most people closely follow their income taxes (often in the hope of a refund), not too many are as excited about property taxes. What they might not know is that according to the National Taxpayers Union, more than 60% of homes are overvalued which means that approximately one in three homeowners are overpaying their property taxes.

If you think you belong in this category, you should move swiftly to lower your taxes. Here's how to proceed.

Understand how property taxes work

Property taxes are calculated as: Town Tax Rate x (Assessed Value/100). This way, if the Town Tax Rate is $3 per $100 and the Assessed Value is $400,000, then the property tax will be $12,000 a year.

The taxes are typically paid from your monthly mortgage payment. Each year, a percentage of the mortgage goes into an escrow account. Then when the taxes are due, the mortgage lender or servicer pays the amount on your behalf from this account.

This means two things; you can't make any deductions, and since you can't dispute the Town Tax Rate, the only way to lower your property tax rate is by lowering your Assessed Value.

Obtain your property card

Get down to the town hall and request to view (or receive a copy of) your property tax card from the local assessor's office. Property cards hold plenty of information that the town has gathered about the property over the past few years. It contains the size of the lot, precise dimensions of the each room, and special features such as a garage or furnished basem*nt. More importantly, it usually has notations about any improvements that have been made to the home over the years and exact dates of each past assessment.

Your job is to ensure that each assessment is correct. Mistakes can happen. Perhaps the assessor mentioned that the house has three bedrooms when in reality it only has two. Those are some of the anomalies you need to point out.

Beware of structural improvements and limit curb appeal

Any structural changes to a home will increase your tax bill. Whenever you add a deck, pool, or large shed to the home, your assessed value will increase leading to a higher tax bill. This doesn't mean you shouldn't try to improve your home. However, you may want to find out how much the new addition will cost you in terms of property tax. The local building and tax department will give you this information for free.

On the same note, keep your curb appeal in check. Remember that assessors are usually comparing your home to rest of the neighborhood. Pimping your property prior to the assessor's arrival could therefore result in an assessed value that it higher than the area's average, leading to a higher tax bill.

Conduct your own research

If you suspect that your assessed value is higher than it should be, it doesn't hurt to do your own investigations. While at the assessor's office, ask for information about comparable homes in the neighborhood and see if there are any discrepancies. If a home similar to yours has a lower assessed value, bring it to the attention of the assessor so that you can get a reassessment.

Additionally, you can make friends with the assessor and have them explain to you how they came to the final value. You can even walk the home with them throughout the assessment process, pointing out the good and bad spots of the home. If this doesn't help, hire an outside appraiser to help you assess the property.

Then, take the next step

If after assessing the situation you determine that you have a genuine case, go ahead and report it. If it's a small math error, the mistake can be corrected on the spot without a formal hearing. If it's more than a math error, prepare to file an appeal.

When not to challenge

This may sound defeatist, but it's sometimes necessary. While challenging the assessment can help you correct an overvaluation, it also has multiple side effects.

For example, if you had a recent remodel done by one of your uncles who didn't have a permit, this could be brought to the limelight. Or, it could be that a kitchen remodel was done by the previous homeowners even though they didn't have a permit. This can lead to fines and unforeseen lawsuits. Issues of building codes could also come up. For example, if the top stair to your stoop is half an inch taller than local codes, then that could be an issue. So, before challenging the assessed valuation, be sure that you have a genuine case.