Mellody Hobson talks property taxes in today’s “Money Mondays” segment.
It’s great that the housing market has enjoyed a slow and steady recovery from the mortgage crisis of ’08. It’s been a seller’s market the past couple of years because there was a shortage of homes for sale, driving up prices. In fact, home values were rose over 12% July 2012 to July 2013, according to the Standard & Poor’s Case/Shiller home price index, which tracks sales in 20 cities. But higher prices for homes means higher property taxes, so I wanted to go over a few of the basics for everyone to ensure they’re not paying more than they need to.
What do we need to know?
Let’s start with a quick recap of the lingo.
Property taxes are usually calculated by taking the assessed value of your home and multiplying it by the tax rate that has been determined by your local government. Exemptions provide tax relief by reducing a property’s taxable assessed value, that is, the portion of the assessed value to which the tax rate is applied. Abatements also reduce the amount of tax that is due, by giving a dollar credit against the actual tax liability. And rebates provide a refund to offset a portion of the tax already paid. All three of these things work to reduce your property tax bill.
What are the top reasons you might be overpaying on your property tax?
The first and most obvious reason is that your home’s assessed value is too high. This is a matter of comparing. Does your property value “fit” with the neighborhood? Look at homes in your area that are comparable to your property in size and the year they were built, and find out how much they’re paying for property taxes. You may find comparable properties are charged substantially less than you are, and this is a good argument to lower your home’s assessed value.
Another common mistake is that you actually have an illegal assessment. Check to see if your home is assessed at a higher percentage of its market value than the law allows.
Finally, there could be an error in your tax assessment. You should closely examine your tax records and check for mathematical errors in recording the details of your house or lot. The most common errors are found in the building’s age or the building’s size.
You typically have 60 days to file an appeal after receiving your assessment, so don’t dally.