NEW YORK (CNN/Money) -
Homeowners, it seems, spend a lot of time complaining about their property taxes but not much time doing anything about them.
According to the National Taxpayers Union, an advocacy group interested in lowering taxes, as much as 60 percent of taxable property in the United States may be over-assessed. That means more than half of all households are paying more in property taxes than they should. Yet, historically only about one in 50 challenge their assessments.
"Most people with mortgages have their taxes automatically escrowed and are less likely to question their taxes," said Pete Sepp, a spokesman for the group. "You find that the people who take a hard look at their assessment are older home owners who have paid off their mortgage or people who are building a home."
If you accept your assessment with no questions asked, you're making a huge mistake. Not only will you pay more in taxes every year, you may have a harder time getting your asking price when it comes time to sell.
Gerry Goldsholle ran into this problem when he put his house in Edgemont, N.Y. on the market. He hadn't given much thought to his property taxes until potential buyers pointed out that he paid $2,000 a year more than similar houses in the neighborhood. With the help of his real estate agent, he put together a file of similar properties with lower assessments, made an appeal and cut his taxes by $1,500 a year.
To appeal your assessment you will need to do some research and possibly hire an appraiser, but you do not need a lawyer. The appeal process is set up for individuals. It is not a court of law. "You can determine whether you have a case in the space of an afternoon," added Sepp. "And your chances for success are pretty good; I'd say as much as 50 percent."
Your home's assessed value is what is used to calculate your property taxes. There are all kinds of reasons why your assessed value might change, whether it's because you made improvements or your neighborhood has suddenly gotten trendy.
While every state has its own laws regarding property taxes, the townships or counties in charge of levying the tax have quite a bit of say in how often property is assessed and with what methodology.
That said, the way most local jurisdictions conduct assessments leaves much room for error, says Donald Kelly, vice president of public affairs for the Appraisal Institute.
"Most assessed valuations are done in reviewing multiple properties simultaneously," he said. "An assessor might work with 200 houses at a time and assign values based on general characteristics, such as number of bedrooms, without going out and viewing the property."
How property is valued for tax purposes also varies from one jurisdiction to the next. Some base your assessed value on a fraction of your market value. Others use what's called a cost approach, which determines how much it would cost to build a house like yours. In any case, never assume that your assessed value is correct, even if it is significantly less than what the house is actually worth.
The most important factor is how your assessment compares with that of similar houses in your neighborhood.
First do your homework
When your property is reassessed, you'll typically get a letter informing you of the new value of your house with little explanation of why your assessment is what it is. But there are a number of ways to determine whether your assessment is on par with similar properties.
If you're friendly with your neighbors, you might start by asking about their assessments. This will give you some idea of whether you have any kind of case, but will require further homework on your part should you decide to appeal.
You might also look into hiring a grievance service to do all of the work for you. These firms typically charge a percentage of one year's tax savings if they help you lower your assessment but charge nothing if they're unsuccessful.
If you have the time, your best bet is to make an appointment with your town or county's assessment office. (Some jurisdictions are beginning to make this information available online.) There you can check your property card for errors, compare your neighbors' property cards with your own and get a clear explanation for how the value of your house was calculated.
Often, your assessed value is incorrect because it was based on incorrect data. Your assessor may have based the calculation on four bedrooms, when really there or only three, miscalculated your square footage or overlooked a defect on your property, such as a leaky roof or cracked wall
If there is a significant error and you catch it early, the assessor may correct it and change your assessment without your having to make a formal appeal. If the assessment has already been factored into what's called a tax roll, the assessor may also acknowledge the error in writing and forward it to a grievance board which is likely to accept the assessor's statement as proof enough.
If your visit to the assessment office doesn't resolve the issue- which is likely to be the case - you'll want to take steps to formally appeal.
Just keep in mind that there is usually a narrow window of opportunity in which to file an appeal. Some jurisdictions set aside a time every year to hear appeals, while others only consider appeals for a few months after your house has been reassessed, which is often not every year. So if you're considering making an appeal, you'll want to find out exactly how much time you have to prepare your case.
Making your case
According to Gary Taylor, an appraiser in New York and vice president of the Appraisal Institute, in most jurisdictions you'll first bring your case to a town or county grievance board. Unless you file good documentation, such as an appraisal or letter from the original assessor, grievance boards are often not willing to change the assessment, he says.
Don't be discouraged. Most people - assuming they have a case - are successful at the next level, which is an informal hearing with a hearing officer or retired judge. "In a hearing, your chance of getting a reduction on your assessment is substantial," said Taylor.
Your main objective is to prove that your property was assessed for more than comparable properties or is inferior to properties with similar assessments.
You can make this case with detailed data, selling prices and pictures. (Click here to order a pamphlet from the National Taxpayers Union on how to fight property taxes).
If you've had a bank appraisal done within the past year, you can also use this to help support your argument. Or you can hire an appraiser to do either a complete appraisal for about $300 to $500 or what's called a first level appraisal, which is not as detailed but is half the price.
Once you've gathered your supporting evidence you'll want to organize your argument and even rehearse your presentation a couple of times. You won't win an Oscar, but you could save yourself quite a bit in taxes.