Property taxes typically lag the real estate market. In bad times, the value of your home goes down, but the property tax is slow to show this reduction. In good times, property taxes slowly follow home prices higher.
Homeowners across the country are facing significantly higher property taxes than they may have expected as a result of the years-long rapid increase in prices of residential real estate. To make matters worse, taxpayers can now only deduct up to $10,000 in taxes on their federal tax return. That figure includes all taxes – state income, property and sales taxes combined, which means that many homeowners can deduct only a portion of their real estate taxes.
If you dread the annual letter informing you that your property tax is going to go up again, what can you do? You may consider approaching the assessor to ask for a property revaluation. Here’s how:
Do some homework to understand the approval process to get your property revalued. It is typically outlined on your property tax statement. In Colorado, there is a multi-step process, which usually starts with your county accessor. Visit your county’s website to learn more.
Understand the deadlines and adhere to them. Most property tax authorities have strict deadlines. Miss one deadline by a day and you are out of luck.
Do research before you call your assessor. Talk to neighbors and honestly assess the amount of disrepair your property may be in versus other comparable properties in your neighborhood. Consult a few real estate professionals, but be honest with your intentions. Tell them you would like a market review of your property as part of your appeal process. Attempt to find comparable sales in your area to defend a lower valuation. In short, build a case for why you feel your property tax assessment is incorrect.
Look at your property classification in the detailed description of your home. Errors in this code can overstate the value of your home. For example, if you live in a condo that was converted from an apartment, the property’s appraised value could still be based on a non-owner-occupied rental basis. Armed with this information, approach the assessor seeking first to understand the basis of the appraisal.
Finally, ask for a review of your property. Position your request for a review based on your research and meet the assessor with a specific value in mind.
While going through this process, remember to be aware of the pressure these taxing authorities are under. This understanding can help temper your position and hopefully put you in a better position to have your case heard.
Andrea L. Blackwelder, CFP®, ChFC, CDFA® and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with the Denver Financial Advisors at Wisdom Wealth Strategies.