Personal Finance

How to reduce your real estate taxes

Taxes for real estate properties are set based on an assessment made by your local tax assessor. But a tax assessor’s word is not the final call in deciding the taxes for your property or business. As the owner of the property, you have every right to question an assessment if it doesn’t amount to a reasonable evaluation. That is, it is certainly possible to get one’s real estate taxes reduced by means of appealing before the concerned administrative body, while remaining within the bounds of the law of state.

Real estate taxes can soar owing to other reasons as well. It is the ‘millage’ rate fixed by the government. But in this case, one is virtually helpless in getting the rates reversed.

As a first step to get things back in place, one should assess the value of his/her property’s current market value. A competent real estate broker could help you with the assessment. The ground under which the assessment may be reduced falls under the categories – overvaluation, inequality and illegality.

Let us see these terms more closely.

  • Overvaluation refers to an assessment in which the property has been assessed for a higher value than its market price. Such incongruence generally creeps in if some mistake had been made in determining the character or size of the edifice.
  • Inequality occurs when the real estate is evaluated at a greater proportion of its worth than the nearby properties in the region. To assay that the assessment is wrong, one should compare many properties in the area and substantiate that your property had been evaluated at a greater percentage of its fair market worth.
  • Illegality arises when a piece of real estate, which has been legally exempted from taxation like in the case of a church, had been taxed.

One has the right to challenge the assessment of his/her property in front of a board of assessment review, at a local hearing of the concerned administrative machinery. If he/she feels that the property assessment is not fair enough, inform the board through a letter, requesting a review of his/her case at the hearing.

In order to make a sound claim, first study the assessor’s records for any error. In this regard, one can peruse the assessment rolls at the assessor’s office.

Also, one could find out if any erroneous assessments had been made with your income property (if any) by virtue of a wrong statement on expenses and rental income. Remember, the earning capacity of a property has a direct bearing on its market value.

Compare the assessed value of nearby similar properties. Testimony of witnesses is vital in the hearing as in any case. Real estate experts and building experts can testify your cause in front of the board.

Still, if you are not able to find a way out, as a citizen of the state you have all the right to go to court. If one is doing so, he/she must petition and serve a notice on the assessor. And the accuser will have to bear the burden of proving that his/her side was right.

If the court finds that the assessment was illegal or erroneous, a new assessment will be ordered and the old one to be struck down from the rolls.