Appealing Your Property Taxes...

Spring is here and that means it’s time to… well, it’s time to appeal your property taxes. Not everyone needs to do this, obviously, but there are plenty of people who should. Do you feel like your most recent tax assessment was pretty high? Alternatively, is your tax record (you can usually find these online through your county assessor’s office) stuffed with wrong information that could be affecting your tax bill?

We’ll help you get it figured out. Welcome to your introduction to appealing your property taxes.

Is it Worth the Effort to Appeal My Taxes?

Everyone has their own idea as to what their labor is worth, so jumping through all the hoops to appeal your property tax is a decision that only you can make. But if you live in a high tax state like New Jersey, Illinois or Texas, the new tax laws may be really hurting you with deductible property tax now capped at just $10,000.

The process can be very time consuming, so a few hundred dollars might not be worth the fight, but a few thousand almost certainly are. You should ask a similar question before you hire a lawyer to handle a tax battle for you — will it be worth it in the end?

If you’re certain that you’re ready to dig in for a fight, then read on so we can help you lay the groundwork.

Challenging Small, But Significant Errors

One of the most common reasons that homes are improperly taxed is because their tax record is incorrect in some way. Common problems stem from the house being listed with more square footage, more bedrooms or more land than is actually there.

Older homes, especially, suffer from these problems because so many people have had their hands on these records over the years. Every time the government caught up to the latest tech, someone had to transfer all that information over again by hand. That makes it too easy to swap a three for a two, or transpose 2300 square feet into 3200 square feet.

To successfully fight your property taxes, no matter how you choose to do it, you’ll need to know what the tax assessor thinks about your place. If the assessor’s office believes you have an additional 900 square feet or an acre that you definitely don’t have, you should have very little trouble appealing your taxes.

Mind the Window, It’s Not Open Long

A really important item to keep in mind when you’re exploring this tax appeal is that the window for said effort isn’t open for very long. You can’t just appeal on a whim, so have everything ready as soon as you can or resolve to try next year. You’ll have to contact your county assessor’s office to find out just when the appeals window is because they can vary pretty wildly.

Just taking a quick stroll around the Internet reveals a huge range of deadlines to file those appeals, here are a few examples:

Cook County, Illinois — Rogers Park Township: March 18
Cook County, Illinois — Oak Park Township: April 19
Washtenaw County, Michigan : July 31
New Jersey: Apri 1, May 1, Dec 1, Jan 1 (depending on your situation)
Make sure you make real contact with your tax assessor because they can keep you informed about any and all changes to the way they’re handling taxes this year, as well as the deadlines that you have to abide by to stand a shot at reducing your tax bill.

Exemptions to Keep in Mind

Certain people, through service or simple longevity, have earned the right to reduced property taxes. That doesn’t mean they’ll get them right out of the gate, though — sometimes you still have to take it to the tax man.

Here are a few ways that you may get a break in your county:

Homesteading. In many states, simply living in your own home is reason enough for an exemption. You may find that only part of your property’s value is taxed under a homesteading exemption, but check the rules carefully because some areas only allow this exemption if you meet specific criteria related to age and income.

Seniors and Disabled People. Many high tax areas have rules in place to help protect the property of people who are older or have become disabled. If either of these statuses apply to you, call your tax assessor’s office and ask for details. Typically you have to income qualify.
Military Vets. Vets who have served during wartime will often qualify for property tax exemptions, provided they were honorably discharged. Different states may tack on additional requirements, but many go the other way and will allow any military vet to receive the property tax exemption.

Remodeling. Plenty of areas are willing to let you work your way to a tax exemption. For example, you might fix up a property that’s at least 25 years old and has fallen into disrepair. In Bismarck, North Dakota, you can get a five year exemption from paying on the value you added to the property just by bringing it back to life.

Green Housing. Some states are greener than others, but the really green ones will happily exclude the value of your green improvements from your tax assessment. It makes it easier to go green when you know you don’t have to worry about paying taxes on those improvements right away, plus you may be able to claim additional tax credits on your tax return.

This is far from an exhaustive list of the property tax exemptions you may be able to claim in your county. Take a stroll down to your county assessor’s office or check them out online to see what exemptions are available in your county.

Supporting Documents for Tax Assessment Appeals

Beyond your exemptions and corrections due to incorrectly entered data about your home, you can further attempt to reduce your tax bill if you think it’s still unfair. You’ll need to come armed, though, because now the county will be putting up a fight.

The most important tools you can have in this war are an up-to-date appraisal, a comparative market analysis and documentation of any damage to the home since the last tax assessment (for example if the roof now leaks because a tree fell on it, that would certainly reduce its value).

Up-to-Date Appraisal

An appraisal is a time-sensitive document, since it only describes your home during a set point in time. Don’t rely on an old appraisal to get a tax assessment reduction, instead hire an appraiser to perform one that’s all brand new.

The catch is that you may spend more on the appraiser than you will save this year, but if you plan on staying in your home for a while, even the smallest dent in your taxes makes an appraisal a good long-term investment.

Comparative Market Analysis

When you can’t have an appraisal done, either because it’s not cost-effective or because you’re cutting your county’s submission deadline close, a CMA could save the day. Real estate agents are not appraisers, but they can provide a great deal of insight of their own. Since they have access to information on homes around yours that have sold, they can help you figure out what values are right now.

Unlike appraisers, who are generally deemed competent to judge the value of a property, real estate agents aren’t always given the same benefit of the doubt, even though comps (comparable properties) are pulled using very similar criteria. Ultimately, a CMA that helps establish your home’s value is an iffy approach, but it’s still an informed one.

Documentation of Damage

Serious damage to your home can reduce its value. So, for example, say you had a major storm and now half the siding is gone and the brick on the front sheared clear off below the windows. This is no small thing.

Photographs, letters from the neighborhood association, copies of fines your HOA is threatening to impose can help. The downside? Well, your house is broken and devaluing further every time it rains. Also, too much documented loss of value could make your lender nervous, to the point that they call in your note.

Presentation and Waiting… and Waiting…. and Waiting…..

Your supporting documentation is vital to the fight against your higher tax assessment, so make sure you have copies to spare. Once you’ve submitted or presented your case for a reduced tax burden, it could be several months before you get an answer. Keep those copies at least through the end of the appeals process because if any documents have gone missing, you’ll need to be able to replace them quickly.

If you end up still owing as much tax as you did at the beginning of the process, you can generally appeal one more time. You’ll want to bring more ammo with you, so if your first attempt at appealing your tax assessment included a CMA and not an appraisal, go the distance and have that appraisal performed, too.

Keep in mind that what you’re appealing isn’t your tax rate, but the assessed value of your home. The same tax rate applies, just to a much less valuable piece of property. This is both good and bad for you. It’s good because, hey, less tax. It’s bad because you could literally be undermining your efforts to sell or refinance your property.

You’ll have a much easier time appealing your tax bill if you have a legitimate exemption that you can claim or there are errors in your tax records. This is the easy road, compared to the harder route of trying to convince the assessor’s office that they overvalued your home by mistake..

If You Need Property Tax Help…

Take a gander in your HomeKeepr community. You’ll find lawyers, real estate experts and even remodelers who can help with various aspects of your property tax appeal. Don’t give up if you meet some resistance at first, just call on your HomeKeepr crew to help you with the right documentation to prove that you deserve a break on your taxes.

Understanding How Property Taxes Are Calculated

Understanding how your property taxes are calculated can often feel like unraveling one of the deepest mysteries of the universe. However, it’s vitally important that you get your arms around this tax, if you are subject to it, as it’s often a large expense that you may be saddled with for a lifetime.

Property taxes can vary wildly, not only between different areas of the country, but even between different parts of the same municipality.

Just how do property taxes work? Shouldn’t they be the same for everyone?

First, Real Property Versus Personal Property

When we refer to “property taxes,” what we really mean is “real property tax.” The term “real property” means the land you own and everything that is permanently affixed to it. For example, if you have a stick-built house, a garage, a shed with a permanent foundation — these are all things that would be considered “real property.”

On the other hand, you may also have “personal property,” which is basically anything else that you own that may have a title and can be moved, even if it takes a bit of work. Your fishing boat, your car and, to confuse matters further, most manufactured homes, are considered personal property – not real property. Manufactured homes specifically can be a bit of a sticky wicket because you can often affix one to your real property in such a way that it also becomes real property.

For the purposes of this discussion, when we say “property tax,” we’re talking about real property, less any specially qualified manufactured homes.

Your Property Taxes Are Made Up of Layers

Most people know that their property taxes are calculated based on the value of their property, but there are lots of homeowners who don’t realize that what we all generally refer to as “property tax” are actually several different taxes smashed into one greater tax sandwich… or layer cake, if you will.

Your home is very likely located in several intersecting tax jurisdictions that can vary greatly from area to area. The taxing jurisdictions that homeowners most often encounter are your:

City
School district
County
State
Fire district
Cemetery district
Library district
Each of these layers will have their own tax rate, making the calculation of your property taxes even more confusing. And by the way, the value used to determine your taxes isn’t necessarily your home’s appraised value, it’s something called the assessed value.

An Aside for Assessed Values

Property tax assessments are often one of the most confusing concepts for most new homeowners. However, you need to have a handle on it in order to understand your property taxes. The assessed value absolutely is what your taxes are based on, but there’s no set way for any tax jurisdiction to determine this number.

In some places, your property’s assessment and your home’s market value may be more or less the same, in others, the assessment is a stated percentage of the market value. In addition, these values might be updated yearly, every other year or only when the home is resold. If you meet certain requirements, you can also have your assessment frozen so that your taxes can only increase if the rate itself increases (and even then, there are a few states that will freeze your actual tax rate).

Put another way, knowing how your property assessment will work is kind of the key to how everything behind the scenes works. Without that, all the layers of government grabbing at your wallet are pretty meaningless. Fortunately, if you’re just looking to simple math, this figure is provided for you by your taxing bodies. We recommend you call or drop into your local tax assessor’s office to get a detailed explanation of your specific tax situation as every taxing body may be slightly different.

Wait, What’s a Mill Levy?

You’ve probably seen the term “mill levy” tossed around if you’ve been reading up on property taxes. A mill levy is just another way to describe the tax rate that’s being applied to your real property’s assessed value. One mill is equal to a buck per $1,000 of the real estate’s assessment, or 1/1,000 of a penny. The mill rate that determines your tax is set by the taxing authorities themselves.

For example, let’s say your property is assessed at $250,000 (by whatever method). If your county mill levy is 5, then for every $1,000 of assessed value, your bill goes up $5. In this case, that’s a very reasonable sounding $1,250. Remember, though, this is just one layer of the tax layer cake. You’ll need to add all the layers together to get your actual tax bill. Get your calculator ready and pour yourself a stiff drink – this could take awhile!

Need More Information About Your Property Taxes?

There’s no better or more reliable source for tax information than the people on the ground nearby. That might mean CPAs, real estate agents, home appraisers or even a mortgage pro. They can help you make more sense out of your tax bill if something specific is confusing. And don’t worry, finding the best of the best among these professions is simple with HomeKeepr. Just ask your community for recommendations and before you know it, you’ll be elbow deep in answers to your most burning tax questions.

Changes to real estate tax deductions for 2018

As a homeowner, or soon to be homeowner, you can get some pretty sweet tax deductions from things related to your home. Some tend to change from year to year, like those for energy-efficient upgrades, others are pretty stable, like being able to deduct mortgage interest.

The tax bill that will be in force in the up and coming tax season, the Tax Cuts and Jobs Act (TCJA), has made some fairly dramatic changes to how many homeowners will file their taxes this year. Take a look at this preview of home-related points to ponder for your 2018 tax filings.

TCJA Items to Watch in 2018

When the TCJA was pushed through Congress in December 2017, many people were up in arms. The overhaul, they said, was going to be problematic for a number of reasons, which, we’ll see how that pans out. It does seem that when it comes to real estate, the TCJA is going to be a pretty prickly thorn in a lot of property owners’ sides.

These are the top items you’ll want to pay close attention to this year:

Item #1: SALT

The state and local tax deduction (SALT) is set to be a problem for homeowners in high-tax areas. In the past, you could claim an unlimited amount of already-paid personal state and local income taxes, as well as your property taxes, as a deduction to offset your tax bill. From now until 2025, you’ll only be able to use your Schedule A to itemize $5,000 worth of these taxes if you’re single or married filing separately and $10,000 for married filing jointly.

This looks like a bear of an issue for many people in those high tax areas on both coasts, but for some, the increase of the standard deduction to $12,000 for singles or $24,000 for couples may balance the equation.

Item #2: Your Mortgage Interest Deduction

If your home was purchased after December 14, 2017, you will be subject to the new limits on mortgage interest deductions. Instead of being able to deduct the interest on up to a $1,000,000 mortgage, you’ll be capped at the interest on only $750,000. Now, if you’re in the less spendy parts of the US, you probably don’t need to worry about this at all, but again, for those of you on the coasts where real estate prices are often hugely inflated by comparison, it may make a weighty difference.

According to a Zillow report published shortly after the TCJA passed, “Under the current setup [Pre-TCJA], roughly 44 percent of U.S. homes are worth enough for it to make sense for a homeowner to itemize their deductions and take advantage of the mortgage interest deduction.Under the new bill (as reported), that proportion of homes drops to 14.4 percent. Interest on second/vacation homes will remain deductible, but will also be capped at $750,000.”

Item #2B: Home Equity Loan Interest Deductions

This one is being called out specifically because of the number of people who are likely to be affected by it. If you purchased a home at any time and took out a home equity loan, you may lose your deduction this year. The TCJA says that unless your home equity loan was used for home improvements, it’s no longer allowed.

There is no grandfathering for this clause, you are paying for decisions you made in the past, not knowing this bill would become a law.

How the IRS will be able to verify how you spent your funds, especially if the loan is 10 or 15 years old, is anyone’s guess.

Item #3: Gains From Home Sales Still Protected

Despite all the new rules that are taking deductions away, the home sale gain exclusion remains. You’ll still be able to exclude up to $250,000 ($500k for married filing jointly) of gain from a home you’ve owned and used as a primary residence for at least two of the last five years. So, you’ve got that going for you.

Taxes and Real Estate: A Tricky Mix

It’s a good thing you have a whole community at HomeKeepr watching out for you when it comes to changes to the tax laws this year. When you’re ready to start discussing your own tax situation, just use the search function to find accountants and tax preparers that can answer your burning questions. Since all the HomeKeepr pros come heavily recommended, you can feel confident that you’re ready for the big tax law change.