Author Topic: Disputing a pretty ridiculous property tax increase  (Read 1853 times)

webguy

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Disputing a pretty ridiculous property tax increase
« on: November 15, 2017, 10:14:42 PM »
Hey guys, I'm wondering if anyone has experienced this and has any advice for me.

We moved to a new house this Spring. It had been on the market for 6 months and was listed at $640k. The comps showed it should have been closer to $600k and the tax assessment was at $605k. We ended up settling on $620k.

We just got our property tax statement for 2018 and it has it at $685k - a 13.2% increase - which seems pretty crazy seeing as we just paid $620k for it and there were no other offers.  We live in a small neighborhood and most of our neighbors homes have stayed within a few percent of last years assessment.  Our neighbors across the street paid $760k for their home 2 years ago, has a current Zillow estimate of $850k, is a much nicer home than ours and their assessment for next year came in at $656k which is lower than ours!  It's not making a whole lot of sense to me.

The only thing I can think of is that the assessor came about 2 weeks after we moved in when I wasn't home and my wife didn't let him inside the house as she was home alone and wasn't sure who he was. I'm wondering whether that perhaps affected the assessment as our home doesn't have many of the high-end interior finishes that other homes in this price range do.

Do we have any recourse for this?  It's going to increase our property tax by $1k/year which we're obviously not thrilled about.

Thanks in advance for any advice or suggestions!
« Last Edit: November 15, 2017, 10:16:14 PM by webguy »

ixtap

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Re: Disputing a pretty ridiculous property tax increase
« Reply #1 on: November 15, 2017, 10:44:33 PM »
The appeals process should be laid out in the document received. If not, call the assessor's office to find out how to start the process.

sokoloff

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Re: Disputing a pretty ridiculous property tax increase
« Reply #2 on: November 15, 2017, 11:17:18 PM »
What ixtap said.

I've often fantasized that the property owner, in addition to the existing appeals process, should have the right to force the municipality to by the property at 95% of the assessed value after review. Assess me, I appeal, city changes (or not) the assessment, I have the right to force the city to buy it at 95% of the post-appeal value (or accept the value).

webguy

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Re: Disputing a pretty ridiculous property tax increase
« Reply #3 on: November 16, 2017, 08:32:34 AM »
Thanks guys. I understand there's an appeals process I was more just wondering if anyone who had been through it had any advice, whether there was a chance of success, and how much work is involved.  I have the assessment in front of me and it says:

"Now is the time to provide feedback on proposed levies.
It is too late to appeal your value or classification without going to Tax Court."


One thing I just noticed which I didn't before, is that our 2017 classification was "Homestead", whereas our 2018 classification is "RES NHSTD", which means Residential Non-homestead.  I'm not sure why this would be the case.

Spitfire

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Re: Disputing a pretty ridiculous property tax increase
« Reply #4 on: November 16, 2017, 08:39:44 AM »
One thing I just noticed which I didn't before, is that our 2017 classification was "Homestead", whereas our 2018 classification is "RES NHSTD", which means Residential Non-homestead.  I'm not sure why this would be the case.

I live in a different state (Florida) but here there is a major difference in property taxes between homestead and non-homestead. That may be your answer, hopefully it's just a glitch in the system when ownership changed. Here, if you buy a property you have to apply for it to be considered homestead and get the tax benefits. 

Blonde Lawyer

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Re: Disputing a pretty ridiculous property tax increase
« Reply #5 on: November 16, 2017, 08:51:15 AM »
There's about to be a big tax mutiny in my town.  There was a million dollar shortfall in the school budget and they did a crazy hike to everyone's taxes.  Bills came out yesterday and are due before Christmas for those that don't escrow.  Our house is assessed at $290k and our taxes are going up $2400/year.  They were already really high to begin with too. $7,458 to $9,864.

katscratch

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Re: Disputing a pretty ridiculous property tax increase
« Reply #6 on: November 16, 2017, 09:00:26 AM »
Thanks guys. I understand there's an appeals process I was more just wondering if anyone who had been through it had any advice, whether there was a chance of success, and how much work is involved.  I have the assessment in front of me and it says:

"Now is the time to provide feedback on proposed levies.
It is too late to appeal your value or classification without going to Tax Court."


One thing I just noticed which I didn't before, is that our 2017 classification was "Homestead", whereas our 2018 classification is "RES NHSTD", which means Residential Non-homestead.  I'm not sure why this would be the case.

This makes a big difference. I'd get that straightened out asap, even if it means making an appointment with Tax Court.

I'll also say that my house/land value as assessed by Hennepin county for taxes has routinely been 15% higher than my last appraisal, and for 2018 is assessed 30% higher than my 2016 appraisal.

The interior of my home has not been updated - so my appraisal being lower than the county makes sense. The county assessor hasn't come inside in a number of years (I've never been home when they show up) so their assessment, based on my neighborhood and comps, also makes sense. I'm not sure why you have such a large discrepancy compared to your neighbors, though.

AccidentialMustache

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Re: Disputing a pretty ridiculous property tax increase
« Reply #7 on: November 16, 2017, 09:03:57 AM »
Sounds like something went wrong with the filing. There's forms to appeal, they may have a window you need to do it during. Hopefully you haven't crossed said window yet. Fill the forms, deliver it to the county as appropriate. Arms-length sale price almost always trumps, although I have seen "adjustments" to that number hit as soon as the year after the sale which seems a bit questionable.

Your other option is to get a professional appraisal and use that to try to get the county to lower to that number. Note you don't want the lowest value there -- you want a reliable accurate appraiser (ask your real estate agent, or even the county who they trust) because if you get joe-lowballer, the county will just deny your request, and you don't want to pay for joe-highballer because then you won't get the price dropped much or at all and will be out the appraisal fee.

Note if you refi that will often include the bank requiring an appraisal -- and they'll be required to give you a copy, and that's usually good enough to kick off the process with the county if it'd lower your taxes.

Note: IL resident. YMMV.

Nate R

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Re: Disputing a pretty ridiculous property tax increase
« Reply #8 on: November 16, 2017, 09:04:44 AM »
Thanks guys. I understand there's an appeals process I was more just wondering if anyone who had been through it had any advice, whether there was a chance of success, and how much work is involved.  I have the assessment in front of me and it says:

"Now is the time to provide feedback on proposed levies.
It is too late to appeal your value or classification without going to Tax Court."


One thing I just noticed which I didn't before, is that our 2017 classification was "Homestead", whereas our 2018 classification is "RES NHSTD", which means Residential Non-homestead.  I'm not sure why this would be the case.

We did it after we bought our house.  Purchased after sitting on the market for 1-2 years, seller dropping the price, etc for $150K in 2013. In 2011 it was assessed at 181. In 2012 it was down to 163k.
I appealed the assessment in 2013.  I was warned up front it COULD go either way, up or down.

Assessor made an appointment as part of the appeal, he and I walked the house together, and he and I noted that it didn't have the high end finishes as the classification of it had indicated. He also noted the condition was worse than they had noted last. AND he remeasured the size of the house and found it a tad smaller than what was indicated.  We DID talk about how the sale was forced due to a divorce, so they claimed that made it not arms-length.....But given that it sat on the market so long, it's not like they sold below market value...

It worked out in my favor, assessment dropped from 163K to 143K.

Now, the neighborhood is rising, and my assessment is up to 158K this year. Next door neighbor's house (Same layout, same age, same finishes, SAME EXACT HOUSE is at 180K (Because hers never dropped like mine from an appeal.) That difference right now in my town is worth close to $700 annually. The difference WAS at $500 or so initially. So, I'm hitting about $2700 in total savings this year (2013-2017) for appealing my assessment once in 2013. Not bad for about 2 hours of work.

webguy

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Re: Disputing a pretty ridiculous property tax increase
« Reply #9 on: November 16, 2017, 09:46:27 AM »
Thanks for the feedback everyone, this is really helpful.  I called the local assessor's office and had a conversation with him, he said as the sale was made in 2017 that the price we paid wouldn't have been used in the value calculation as they only used sales up until the end of 2016, but that it did seem like it was high considering the previous year's estimate and the neighborhood home's modest increase.  He said at this stage there's two options:

1) Appeal the valuation in tax court.  This would likely require a professional appraisal - although we had one done when we purchased the property and could probably just use that - it came in at $625k.  He said it would take some time and cost and that he's currently backed up about 2 years with tax court re-evaluations and so it would likely be a lengthy process.

2) Pay the increased taxes this year and then when the property tax estimate arrives in the Spring for the next year then we can dispute it for free at that point by calling him and having him do a reassessment.

He also mentioned that the non-homestead classification would not have made a difference as our property is above the price threshold.

I'm not sure what's actually involved in going to tax court to dispute this, or whether it's just going to be one big headache. I have two young children and run my own business and don't have a lot of spare time/energy at the moment, but I also don't want to be overpaying for no good reason.  Has anyone else actually been through the Tax Court process?  If so, what was involved?

marion10

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Re: Disputing a pretty ridiculous property tax increase
« Reply #10 on: November 16, 2017, 09:53:42 AM »
In our state- you can file an appeal through the assessor's office. We tried once, did not prevail. There are many attorneys who work on contingency and that is what we did the next time- you pay nothing unless you win and then it is a % of the reduction. I do not know if that is available in your area.

Altons Bobs

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Re: Disputing a pretty ridiculous property tax increase
« Reply #11 on: November 16, 2017, 10:51:30 AM »
In my county, you can do 1-3 types of appeals - electronic, in person informal, and/or formal. I go every year. We only have custom homes in our neighborhood, so the build-out levels are different from house to house, they would only compare houses with similar build-out, but you can appeal and show proof to convince them to change it too. I do a lot of research every year to compare and bring my research to them.

If this is your first year in your county, you probably want to try everything you can. First year, I did electronic, they rejected my offer, so I went in person, they also said no because it was our first year in our new home, so I went to the formal one and was able to convince them to lower it a little, not a lot.

You have to look at your surrounding, not just your house, and your house also, and the houses in your neighborhood and compare the prices and quality of the materials used, and if there's a ditch next to your house or something else that you think may decrease the value of your house. I walk around my house inside and out, take notes, take pictures. I also walk around my neighborhood and do the same. Bring all of the reasons with you when you appeal. That's what I do every year, I run a business and I have a kid as well, but I make time for this, I do go very early in the morning. This year I didn't do so well, I was only able to convince them to take off $52k, last year I was able to do $62k. Every bit helps. I have a neighbor who was able to get them to take off $90k!

Good luck!

Nate R

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Re: Disputing a pretty ridiculous property tax increase
« Reply #12 on: November 16, 2017, 11:07:49 AM »
Thanks for the feedback everyone, this is really helpful.  I called the local assessor's office and had a conversation with him, he said as the sale was made in 2017 that the price we paid wouldn't have been used in the value calculation as they only used sales up until the end of 2016, but that it did seem like it was high considering the previous year's estimate and the neighborhood home's modest increase.  He said at this stage there's two options:

1) Appeal the valuation in tax court.  This would likely require a professional appraisal - although we had one done when we purchased the property and could probably just use that - it came in at $625k.  He said it would take some time and cost and that he's currently backed up about 2 years with tax court re-evaluations and so it would likely be a lengthy process.

2) Pay the increased taxes this year and then when the property tax estimate arrives in the Spring for the next year then we can dispute it for free at that point by calling him and having him do a reassessment.

He also mentioned that the non-homestead classification would not have made a difference as our property is above the price threshold.

I'm not sure what's actually involved in going to tax court to dispute this, or whether it's just going to be one big headache. I have two young children and run my own business and don't have a lot of spare time/energy at the moment, but I also don't want to be overpaying for no good reason.  Has anyone else actually been through the Tax Court process?  If so, what was involved?

If I'm you with time constraints, etc, I'd just pay the 1K this year extra, and next year dispute it and pat yourself on the back for paying attention. :-)

Doesn't SOUND like the 1K saved in tax court (for 2 years, so do you have to pay now anyway under protest!?) would be worht the time/hassle/money sved.

katscratch

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Re: Disputing a pretty ridiculous property tax increase
« Reply #13 on: November 16, 2017, 11:18:57 AM »

He also mentioned that the non-homestead classification would not have made a difference as our property is above the price threshold.


Good to know! My understanding was based on research for my $95k purchase-price house valued 300% higher, so not relevant to your situation, heh.


I like option 2 in terms of ROI factoring in your time and annoyance. I've not done Tax Court, but Traffic Court was worthwhile after once receiving a bogus parking meter ticket ;) That only required a few photos on my phone, one phone call, and about ten minutes out of my day off, however.

Good on you for catching this error in the first place, by the way.