How to Get Your Property Taxes Lowered

If there was a way you could save $3,500 with 30 minutes worth of effort, would you do it? While it might sound too good to be true, that’s exactly what Oakland, California, homeowners Earl Davis and Tarita Whittingham did last year when they applied to have the Alameda County Tax Assessor reassess their home. “It took me a half hour, total,” Davis says. “Four months later, [the county] reassessed the house from the $645,000 we paid to $463,000, and sent us a refund check of $1,773. They automatically carried over the lower value to the next tax year, so we’ve already saved that much again.”

Davis and Whittingham are two of the large majority of American homeowners who still have their jobs and are current on their mortgage payments but have watched the value of their home fall over the last couple of years. Nationwide, actual home values declined about 33%, on average, from the peak of the housing bubble in fall 2006 to the trough of the crash, in early 2009, rendering current home values similar to what they were in 2003 or so. As a result, the assessed values of many homes purchased after about 2003 still reflect long-gone, top-of-the-market values. Assessed property values provide the basis for how local governments calculate property taxes. Therefore, having your home reassessed to accurately reflect the current—in most cases, lower—market value can save you thousands in taxes.

Whittingham and Davis, who purchased their home in August 2007, represent the average American homeowner in many ways, but their approach to homeownership during a housing market collapse was atypical. Tarita, 36, and Earl, 37, both hold M.B.A.s and work for Citibank and Wells Fargo, respectively—Earl in commercial real estate lending. It was clear to Earl that panicking or short selling would be the wrong approach. “You just can’t freak out and sell it. That locks you into a cash loss. Losing cash is worse than just losing money on paper. The way I saw it, the more the market was going down, the longer I was going to stay in this house.”

Earl’s work played a role in bringing the couple’s higher-than-necessary property taxes to his attention. “As part of my job I review lots of market reports and data about real estate, so I knew my home’s value had come down. The further down it went, the more I was thinking, ‘What do I need to do to save some money?’ I didn’t want to pay taxes on the lost value of my investment, so I started to investigate what I needed to do to correct it.”

Like many homeowners, Tarita and Earl received a number of offers in the mail from consultants and attorneys offering to get their home’s assessment lowered—for a fee. Instead, Earl did it himself. “It was fairly simple. I went to the county Website and downloaded the form. I called the county to make sure I was clear on the process, and asked my real estate broker for a list of comparable sales to provide to the tax assessor’s office. The form also asked me what I thought my home’s value was, and I put in something on the lower end of the range of what was reflected by the comparable sales. I mailed the form to the assessor, paid my property tax bill, and just waited to hear back.”

Four months later, Whittingham and Davis received a notice in the mail that their home had been reassessed downward. Also in the envelope: a refund check for the excess taxes they had already paid on the higher assessed value. “It could be something you’ve never thought about before,” Davis advises homeowners who are considering applying to have their home’s value reassessed. “Every little area where you can save helps.” Whittingham and Davis have saved $3,500 since their reassessment, and the savings continue to grow.

Checklist for Lowering Your Property Taxes

Here’s some information to gather before you file for a property tax reassessment:

  • Your home’s Assessor’s Parcel Number (find on property tax bill)
  • Your home’s current assessed value (find on property tax bill)
  • Data from at least three comparable homes that sold during the relevant window of time, including the sale date, sale price, distance of the comparable property from your home, and the basic specs of the comparable home (beds, baths, square feet)
  • Your estimate of your home’s value during the tax year for which you are requesting reassessment (should be lower than the current assessed value to justify reassessment, but not lower than supported by the sales data)

This article originally appeared in the February 2010 issue of Black Enterprise magazine.

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