(MONEY Magazine) – You probably don't have to look beyond your own backyard for a homeowner who's steamed about his property tax bill. In fact, if you and your neighbors are like the 300 MONEY subscribers polled late last year by the Gallup Organization, local property taxes, which are up nearly 50% over the past five years in some places, may well be the fastest-rising tax you pay. More galling still, if your area's housing prices have turned soft, your tax bill may reflect your home's higher value of several years ago. Or your tax assessment, even if it's up to date, may simply be wrong. Nancy Freeman, president of Property Valuation Consultants in Joliet, Ill., estimates that 40% of the time overworked tax assessors set incorrect values on houses -- most often in the tax collector's favor. The assessments are typically 5% to 20% too high and cost homeowners $150 to $1,000 in extra taxes each year. ''Assessing property is not an exact science,'' concedes Ian McClung, acting executive director of the International Association of Assessing Officers, a Chicago-based professional group. ''It's a process, open to interpretation and change.'' As homeowners like Al and Barbara Longo of Wall Township, N.J. (at left) have found, however, you can make the process work to your benefit -- if you know how to complain to city hall. The Longos managed to chop their house's assessment by $72,600 to $309,000, thereby cutting their property taxes by $992 to $4,224 a year. Real estate consultants insist that if you have evidence to support your case, you too can get a reduction. The most obvious time to consider a protest is right after you receive a new assessment. Many localities, in fact, allow homeowners to appeal only within 14 to 60 days after such notices are mailed out. Wholesale reassessments of all homes in an area, known as revaluations -- ''revals'' to assessors -- typically occur every two to eight years. Otherwise you can expect a reassessment after you make a substantial renovation such as adding a room or a swimming pool. Revenue-hungry municipalities often use revals to hike assessments aggressively as a means of bringing in extra tax receipts. ''Some towns reassess homes at 10% or 20% over their market value,'' says Daniel Keough, a real estate attorney with the law firm Paragano & Garb in Parsippany, N.J. ''The city officials know that even if you appeal and win, they will have a nice interest-free short-term loan in the meantime.'' You needn't wait for a reassessment to appeal, however. Many older valuations rest on incorrect or outdated information that can be challenged at any time. When housing values soar, cities often race to reassess properties and sometimes let assessors base their estimates on quickie drive-by visits rather than on careful home inspections. As a result, for example, your home's square footage can be mismeasured. If you think your assessment seems excessive -- perhaps after comparing yours with your neighbors' -- you can fight the battle yourself or you can hire a local property tax consultant. Since consultants typically charge steep contingency fees of about 50% of your first year's tax savings, as a rule you are better off on your own, armed perhaps with a book such as Taxpayer's Survival Kit (Tax Management Group, 4845 Ronson Court, San Diego, Calif. 92111; $54.95) or How to Lower Your Property Taxes (King Associates, 143 South Rd., Chester, N.J. 07930; $39). Start by visiting your local assessor's office and asking for a copy of the worksheet, known as the property record card, that he used to estimate your home's value. Also pin down the meaning of any abbreviations or codes on the card. Question him closely to learn exactly how the municipality calculates your assessed value working with the information on the card. Finally, ask for a list of all available exemptions, such as those for war veterans or homeowners age 65 or older, so you can be sure you received any you deserve. When you get back home, verify all the information on your property card. The data will include your house's age; square footage; number of rooms and fireplaces; the condition of your attic, roof and garage; descriptions of the heating and air-conditioning systems; the size of your lot; and both the quality of your view and of the neighborhood. Make sure that the card also notes any features that detract from your property, such as being located next to a freeway or an industrial park. Your savings from correcting errors on a property record card can be substantial. Last year, for example, lawyer Mayor Shanken, 54, of Paradise Valley, Ariz. discovered that his new 3,400-square-foot adobe home was down as a 4,500-square-footer. Just by getting this mistake fixed, he trimmed $800 from his $2,900 tax bill. Your next task -- determining whether your assessment is fair -- may be far more complicated. Some localities assess property for tax purposes at fair market value -- that is, what you would get if you sold. In most communities, however, assessors estimate the home's market value and then apply a formula, known as the statutory or classification ratio, to arrive at the tax assessment. If your community has just gone through a reval at full market value, you need only that number to figure out whether you are indeed being treated fairly. Otherwise, ask the assessor for the statutory ratio, as well as for the current equalization ratio, which lets you compare assessed values with actual selling prices of properties. For example, say that you believe your house is worth $150,000. The town has it assessed for $32,500, the statutory ratio is 25%, and your equalization ratio is 65%. What does the town think your house is worth? First, divide the assessment ($32,500) by the statutory ratio (25%). Result: $130,000. Next, divide this figure by the equalization ratio (65%). The result: $200,000. . That's 33% more than your own $150,000 estimate. (Because the computations can be complicated and vary dramatically, you may want to seek help from a clerk at the county board that oversees assessments.) Of course, you can't simply march into city hall with your arithmetic and expect your house will be revalued to $150,000 from $200,000. Rather you must prove it by collecting evidence of the current market values of three to five nearby houses like yours that have been sold recently, ideally no more than six months before your assessment. Your assessor or a local real estate agent can probably provide that information. To make sure the houses you cite are similar, compare their property record cards, if your assessor will let you see them, or look up their sales records in the county courthouse. Also, drive by each house to verify that the exteriors and locations approximate your home's, being careful to adjust the sales prices accordingly. Should your research show that the assessor's market value of your house is at least 10% out of line, you have an excellent chance of winning an appeal. If your town's revaluation was done more than two years ago, your home's assessment may now be out of line. Check by asking the assessor for a copy of the latest assessment/sales ratio study, which shows how assessments stack up to sales prices. If the ratio is 65%, for example, it means that homes in your area are assessed at 65% of their selling prices on average. Therefore, if your assessment is, say, 75% more than the fair market value of your house, you're overassessed. You generally appeal an assessment at an informal meeting with the assessor at which you can point out factual errors on your property card. Be sure to bring along any useful documentation. For instance, if your property card has the wrong square footage, present your survey proving the correct figure. If the assessor rejects your challenge, you can fill out an appeal form, usually available from the assessor, requesting a review of his decision by the local board of appeals, which is typically made up of three to five local business people. When you go before the board, take along your sales comparisons and other relevant evidence, such as recent appraisals, photographs or floor plans. Give board members photocopies of your documents before you summarize your appeal orally. Conclude your challenge by proposing an alternative assessment. Above all, don't antagonize the board by losing ^ your temper. ''Keep your emotions out of the hearing,'' says Paul Jacobs, the city assessor in Rochester, N.Y. ''Get down to numbers, and stick to them.'' In most cases, you'll receive the board's decision by mail within six weeks or so. If you lose but still believe you have a solid case, you can appeal to a higher level, often a state review board that follows a procedure much like the local one. Should you lose there, you can go on to a state tax court. Before you do, though, ask yourself whether an extraordinary amount of money is actually at stake. The cost of hiring a lawyer -- typically $250 to $1,000 -- should not exceed the tax savings you think you can win.

BOX: KEY TERMS

-- To challenge your property tax bill successfully, you must understand assessor-speak. Here are plain-English definitions of five important terms: -- Equalization ratio: The relationship between house values set by assessors and current sales prices, expressed as a percentage. Sometimes known as the sales ratio. -- Millage: The property tax rate expressed in thousandths of a dollar. If the tax levy is 50 mills, a homeowner will pay $50 for every $1,000 of assessed valuation. -- Reassessment: The local tax assessor's revision of a house's value for tax purposes, for example, after you undertake a substantial renovation. -- Revaluation: An area-wide revision of all tax assessments, often done every two to eight years. The aim is to bring house values into line with each other and to reflect true market prices. Known by assessors as a ''reval.'' -- Statutory ratio: The percentage of market value at which houses are assessed for tax purposes. Also known as the classification ratio. If a community has no statutory ratio, houses are assumed to be assessed at 100% of fair market value; with a 40% ratio, for example, homes are being assessed at 40% of their presumed sales price.