The Hidden Costs of Owning a Home

Homeowners across the country are getting angrier every day about their property taxes.  Skyrocketing home values (even when you factor in the downward trend lately) and elected officials combined to push property tax collections up 35%, from 2002 to 2006, according to the Census Bureau.  That’s double the rate of personal income growth, and the consumer backlash appears to be intensifying.  Tax-cut proposals are being considered in at least 15 states (not counting local county taxes, which are also on an upward trend as well),   Earlier this year, the governor of Texas signed legislation that replaced property taxes earmarked for schools with a 1% tax on businesses.

Despite the trends and activity, campaigning to change property tax rates is difficult at best.  It’s far easier to challenge your own tax bill. 

Tax assessors’ offices are traditionally understaffed, leaving many to rely upon outdated software, or even outside companies to figure out tax bills.  Even when an assessor visits, he/she may not even leave his car.  The American Homeowners Association estimates that 60% of homes are assessed too high, so it pays to scrutinize your assessment line by line.

 The common questions you should pay particular attention to are:

• Are the Basics right?
• Are the number of bedrooms and baths correct?
• Do you have a finished basement?
• Do you have an odd lot size?
• Do you have a sloped lot, shared driveway or easement?

Your home’s assessed value is often based on what your home would sell for or its replacement cost so it’s important to understand what’s happening in your neighborhood and how that impacts your home value.  Doing your homework makes all the difference in this case.  All of your neighbor’s property cards are considered public record, so you can look at them.  You can also check (although somewhat less of a precise measure) what recent home sale prices are in your area. 

All of these will prove to be good ammunition when you gear up for your fight with your home’s tax assessment.  Few homeowners fight back, but statistics show that 70% of those who find an error do walk away with a lower assessment and tax bill. 

There are two type of strategies for this.  First is mechanical errors, where they say you have a heated basement, when if fact you do not.  The other is errors in judgment, where they assume your property is like someone else’s, when it’s not.  The trick is to do your homework.  When errors are uncovered, 70% of those walk away with a lower tax bill with no fight at all. 

As with any governmental agency, be prepared for this to move slower than you expected.  Most taxing authorities have a cycle when the tax assessment becomes effective.  For example, in White Plains, where I live, your assessment as of June takes effect for the remainder of the fiscal year (From September through August).  So plan your fight and do your homework and you will not be disappointed.