Your property taxes are bound to increase, particularly if the neighborhood you’re in is growing at a rapid rate. However, if you find that your taxes are too excessive, there may be something wrong with its tax-appraised value. In that case, you can (and should) file an appeal with your local appraiser’s office.
Below, you’ll find a step-by-step breakdown of what to do in case you want to challenge your property tax payment:
What Causes Property Tax to Increase?
You may be wondering why your property taxes have increased this year. That’s because the property tax is computed based on the home’s current worth and the city’s tax rate. Here are a few possible reasons why your taxes have increased over the year:
- Property Improvements: One of the most common causes of a property tax increase is property improvements. It’s no secret that your property’s assessed value will be partly based on any improvements that have been done. These can be either internal or external improvements, such as a room expansion, bathroom remodel, or patio construction. Since property improvements are up to you, you can decide not to improve your property to lower your taxes.
- Neighborhood Conditions: The more desirable your market, the more your taxes will be. Making an area more desirable to reside in can increase property, which in turn will increase property taxes. New schools, for example, can entice more families to move to that community.
- Local Law and Government: Property taxes are used to fund public facilities, such as public libraries, police, etc. If the local government decides that it needs more money to pay for these facilities, it can increase property taxes. Fortunately, there are limits to how much a city or county can raise taxes at a time, so it won’t ever be excessive.
Pro Tip: Prior to conducting improvements on your property, consult a property management professional. They’ll be able to tell you whether or not a particular improvement will boost its value. If it will, it would be best to put off that improvement for now. In any case, if you intend to sell your rental property and incur a loss, you can claim a tax deduction to reduce your tax liability. Read our blog to minimize the tax impact when selling your rental property at a loss.
Why Would You Appeal Your Property Taxes?
There are several reasons why you may want to appeal your property taxes. Examples are:
Your Property’s Assessed Value Is Wrong
If your property was valued more than comparable homes in your area, consider filing an appeal. For example, if a three-bedroom home was valued at $200,00 and your three-bedroom home was also valued at $350,000, there may have been an error. It’s also worth noting that your property’s tax-appraised value doesn’t have to be the same as its market value.
Your Assessment Contains an Error
A professional appraiser will establish your property’s worth by taking into account its renovations, construction, etc. However, if you find that one of those considerations is wrong, it would be a good idea to challenge the assessment. Suppose you own a two-bedroom home, but the tax assessment says that it has three – this can significantly increase the calculation, so it’s best to file an appeal.
How Can You Appeal Your Property Taxes?
Fortunately, it is possible to lower your property tax payment to the correct amount. To do this, you need to file an appeal. Here’s what you need to do:
Review Your Assessment
You’ll receive a copy of your property’s tax-appraised value in the form of a Notice of Proposed Property Taxes. When you receive it, review if its contents are correct. If you own a three-bedroom home, the calculation should be based on a three-bedroom home. Be sure to read the details – are the number of bathrooms right? More importantly, is the property’s size correct? Remember that as a rule of thumb, the bigger your property, the more you’ll have to pay.
Find Out the Deadline For Filing an Appeal
The Notice of Proposed Property Taxes should contain information on how to file an appeal. In Florida, homeowners typically have 30 days to file an appeal, but this varies by state, so it’s best to consult a local property management company to be sure.
Get Your Property Assessed By a Third-Party
It can be beneficial to get a third-party appraisal of your property’s value. That way, you can verify if the assessor’s tax-appraised value is truly correct. It’s worth mentioning that it can be costly, but if there truly was a mistake, it will be worth it.
Check Comparable Property Prices
Alternatively, you can do your own homework and look into the prices of similar properties. These are also called “comps”. It’s one way to determine how much properties in the same area currently cost. The internet is a treasure trove of data, so you’ll probably be able to find data on accurate property prices there.
Present Your Case to the Assessor’s Office
Once you have your “evidence”, call your local assessor’s office. In some cases, the assessor will be pleased to discuss the assessment over the phone. If this is not the case, or if you want a more in-depth explanation, you may need to schedule a formal review.
The length of the review process will vary by municipality, but in general, you’ll have to wait about a few months for a final decision.
Appeal the Decision
If you don’t agree with the decision, you can continue to challenge it. You can appeal the decision to an independent board, with or without the aid of a lawyer. Do note that if you find yourself in front of an appeals board, you may have to wait over a year.
Can Your Property Tax Increase After Filing an Appeal?
Unfortunately, yes. If the assessor finds that they “under-assessed” your property, they can change their initial assessment, even if you wanted to show that they “over-assessed” it. In other words, the tables can turn on you, so be prepared in case your property taxes do increase.
Streamline the Appeals Process With Luxury Property Care
Consider partnering with a property management company to streamline the appeal process. At Luxury Property Care, we know that the appeals process can be complex. That’s why our experts provide full-service property management that includes guidance during tax time. We’ll navigate the world of taxes with you, and make sure you pay what your property is really worth.