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Can taxes be adjusted after home appraisal?

Posted on: 18th Nov, 2009 01:45 am
In the recent times, the property values are continuously decreasing. Thus, if you appraise your property now, you'll find that the value of the property is quite less than what you've thought it to be. But what about the taxes? If the property value has decreased then the property taxes should also decrease, isn't it? Check out what happens in reality:

Appraised and assessed value of the property…
The property taxes do not depend upon the appraised value of the property. Taxes on your property would depend upon the assessed value. Once you know that the property value has decreased after appraisal, you should file for a reassessment of your property. Though your property appraisal would justify your reassessment, there's no surety that your reassessment would be granted. Moreover, the reassessment may not come low as you would have expected. The taxes for the property would remain the same though your property value had decreased.

Assessed value remains same though the appraised value has declined…
Most of us do not know that appraisals and assessments are totally different things. In case of an appraisal, the property is compared with similar other properties located in the neighborhood. If the property values in your neighborhood have decreased, then your home value will also decrease. Assessment, on the other hand, helps you to know the worth of your property from the point of view of the tax payments. The tax assessors have their different formula to calculate the assessed value of your property.
Thanks for coming up with this thread. I've seen many posters in the forum who have queries related to appraised value of the property and property taxes.

The borrowers will be able to apply for new assessments on a scheduled basis. They will receive their re-assessment through mail. Also, the homeowners may have an opportunity to challenge the re-assessment in front of the tax board once a year. However, there is a time limit for disputing the original assessment. The borrowers will have to dispute the re-assessment within 90 days of receiving it. If they do not get a new assessment, then they'll have to wait for the next regularly scheduled assessment to occur before their property taxes are revised.
Posted on: 18th Nov, 2009 02:41 am
Thanks Sara, to add to your post...

The actual taxes on the property will be determined when the title company executes their searches.

On another note, if your true property value based upon an appraisal is less than the assessed value, then you can potentially have the assessed value reduced which will also reduce your taxes. Only do this if there is a significant difference in value. Otherwise, you do not want to draw any unnecessary attention towards you and your property.
Posted on: 18th Nov, 2009 05:34 am
Hey Sara,

This is an interesting topic and it does come up a lot. Although you are essentially correct, let me first try to clarify a few terms. First of all, an appraisal (also known as a fee appraisal or bank appraisal) and a tax assessment performed by the tax appraiser are essentially targeted at the same goal, which is to estimate the market value of a property. The difference is in the methods used to arrive at an opinion of value. A fee appraisal will typically rely on a market approach to value where the subject will be directly compared to recent sales in the market. This, in my opinion, will be the most accurate way to arrive at a conclusion of value since individual adjustments can be made based on the observed reactions of buyers in the marketplace. Tax assessors, on the other hand, do not have luxury of time to complete this type of analysis on every property. They must rely on a mass appraisal system. A mass appraisal system is a way to use statistical analysis and multiple regression models to provide values across a wide range of properties in a specific area.

Dates are also very important in the difference between the two. A fee appraisal is usually based on an effective date corresponding with the date the appraiser inspected the property. A tax assessor, on the other hand, may only visit your property every 5-10 years. When you receive your tax bill in late spring or early summer (at least that is the norm here), the valuation is usually based on January 1st. This was tough for a lot of people when the market first started to go down because the value would drop below the tax assessment by the summer or later in the year but when they tried to appeal it, the valuation was good back in January.

Anyone that is interested in appealing their taxes should visit their county tax assessor website. Usually they will post the procedures for a tax appeal. Usually the first step involves just contacting the assessors dept. and expressing your concerns. The assessors will usually take another look at your assessment and adjust it if necessary. It is often very rare for things escalate beyond that point; however there is a procedure for that. Keep in mind that if the value is only off by a small amount, the difference in the amount of taxes may be so small that it would not be worth moving forward unless you are doing it out of principle. For example, I had a guy call me for an appraisal to take to the board of equalization to dispute the assessed value. Well the cost of the appraisal was going to be $375 and the difference in taxes (based on his opinions of value) would have been less than $100. So obviously it would cost him more to dispute it than he would get back in savings.

Of course every municipality does things differently so I would suggest starting with your own county assesss office and go from there.
Posted on: 18th Nov, 2009 07:46 am
ben that was a great post. it ought to be required reading for anyone who thinks their home is overtaxed.
Posted on: 18th Nov, 2009 08:16 am
When home values are low, you can contact your county assessor's office and get your property revalued. However, in recent times, tax reassessment scams are on the rise. There are companies which pose as government agencies and send mails to homeowners promising them to help reduce their property taxes. These companies offer help to file for a reduction in property value (that is, filing a tax reassessment appeal) and in return charge hundreds of dollars as fees. There are companies which even tend to charge late fee if they receive applications after a certain deadline.

What you need to do here is, check whether the private company clearly mentions that it is not a government agency and its services are not approved by the government. Otherwise, chances are that you may be scammed by companies posing as government agencies.
Posted on: 20th Nov, 2009 04:24 am
samantha, i didn't even know about this assessment scam being perpetrated. thanks for the heads-up. i'd have to add to this that if there's someone who is asking for a fee upfront to have a homeowner's assessment lowered, then that homeowner needs to back away immediately. there's not going to be any agency "affiliiated" with a governmental agency that would get involved in this - the only firms that might try to do this would be independent of anything that has to do with government.

no matter what, i see no sense in paying anyone for such a "service." if asked for money, then i think mr and mrs homeowner need to recognize that this is not what it's purported to be and to move in the opposite direction.
Posted on: 21st Nov, 2009 11:18 am
The theory with taxes and property values decreasing is that all properties in a municipality will decrease or increase with the market and therefore your assessed value (the valued used to calculate taxes) should still represent your obligation. Example, if your property represents 1/10,000 of a percent of the tax base, it will still represent 1/10,000 of the tax base regardless of value as will you neighbors and your friend across town.
Posted on: 29th Nov, 2009 09:29 am
You are correct, "in theory". Also in this perspective, the county could estimate a declining trend and apply a percentage decrease across the value of all properties and then change the millage rates to maintain the same revenue. It may not even be all that cumbersome of a project considering how a mass appraisal system works. Of course, a significant change in the millage rates will most likely cause more complaints than the few that dispute their values.
Posted on: 29th Nov, 2009 05:34 pm
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