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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: EliStache on September 04, 2014, 04:33:00 PM

Title: Property Taxes - to appeal or not?
Post by: EliStache on September 04, 2014, 04:33:00 PM
Hi Mustachians, I'd love to hear your thoughts and advice on a moral quandary regarding taxes. 

I bought my house in Seattle in 2012.  At the time, the assessed value was very low.  Based on the sale, the assessment increased dramatically the following year but it is still well below the market value of the home.  I appealed the assessment, however, because the assessor increased the condition of the home to "very good" (the best category, pristine condition) from "good" (no obvious repairs needed) based on the listing photos.  The home is quite nice, but the condition -- based on the definitions provided by the assessor -- is actually "average" because it requires a number of minor repairs (rotting front porch, cracked and crumbling plaster walls, broken siding, etc.).  So, I think I have a pretty good argument for the appeal that the condition of the house is listed incorrectly.  I also don't want the assessment to continue to go up even higher as I make some of these repairs.

I don't feel "right" pushing this appeal too hard, however.  Washington State does not have an income tax and, while I like to save money, I generally believe that tax revenue is important to keep things running smoothly.  The state and the City are constantly in budget crises and property taxes are the only revenue available to provide many of the services that I depend on (roads to ride my bike on, for example, and new bike lanes, and decent public schools).  The best I can do with the appeal is probably around $500/year -- not peanuts, but also not extraordinary in the big scheme of my mustachian lifestyle.

What would you do in this situation?  Should I push the appeal?

Title: Re: Property Taxes - to appeal or not?
Post by: Aphalite on September 04, 2014, 04:50:32 PM
Push the appeal, the tax assessment will always rise, so you will eventually be paying them as long as you have lived there for long enough, no sense in accelerating the rate increases
Title: Re: Property Taxes - to appeal or not?
Post by: Thegoblinchief on September 04, 2014, 04:55:27 PM
Is it more or less than what you paid for it? If it's less, you have no case. Value is what something is purchased for.

If it is more than what you paid for it, how big of an increase? Is the percentage increase in line with values in the neighborhood?
Title: Re: Property Taxes - to appeal or not?
Post by: slugsworth on September 04, 2014, 05:16:08 PM
For what it is worth, I successfully appealed the value of my house in Seattle.

I had just refinanced my house, so I had a bank ordered appraisal and lost the initial appeal because apparently in that court the city is presumed to be correct. I was asked if I wanted to appeal to the state, it was free so I said, 'Sure'. In the second level appeal, there was no presumption that the city was correct and rather it was an equal field and my bank ordered appraisal held more weight and I won.

SO, while I also have no problem paying what I feel are very modest taxes in WA - I would suggest appealing it the second time if you go that route. 
Title: Re: Property Taxes - to appeal or not?
Post by: Mrs. PoP on September 04, 2014, 05:19:00 PM
I would ask two questions:
1 - is the assessed value greater than the fair market value on the date of the assessment?  (the date is likely Jan 1, 2014)
2 - was the rate of increase greater than any cap mandated by law?  (if there are legal limits in your area that cap YOY increases)

If the answer to either is yes, then challenge it.  If the answer is no, then you are paying a fair amount of tax on your property. 

When we challenged ours about 6 months after we purchased, we watched as several other homeowners tried to argue for lower assessed values because they felt it was "unfair" that their neighbors were paying more or less.  But when push came to shove they said the answer to both of the two above questions was no, and the magistrate basically told them they had no case. 
Title: Re: Property Taxes - to appeal or not?
Post by: zolotiyeruki on September 04, 2014, 06:23:44 PM
Challenge it.  Period.  In my experience (9 years of homeownership in 2 areas, so take it for what it's worth), the Assessors will increase the appraised values as much as they can get away with, and the values they cite are rarely in line with reality.
Title: Re: Property Taxes - to appeal or not?
Post by: Gone Fishing on September 05, 2014, 12:13:24 PM
Go for it, all they can say is no.  The only reason I wouldn't is if you plan on selling in the next 24 months or so.  We can say all we want about how far off tax values are, but at then end of the day they do help support sales prices to some degree.
Title: Re: Property Taxes - to appeal or not?
Post by: DoubleDown on September 05, 2014, 12:17:02 PM
If there's any moral argument to be made (and I don't really think there is, because it's taxes/law), then I think your only moral imperative is to you and your family to pay as little as possible. I also value government and the services it provides, so I'm no anti-tax libertarian (quite the opposite). But your duty is to pay what the law says, and not one penny more, and to structure your affairs to pay as little as possible. Those who made the laws expect you to try to pay as little as possible (and they do the same), there is nothing wrong with that.

I've appealed my assessed values many times, with extremely solid cases (including a 50% increase in one year, and another time an identical house next door valued by the County at half the value of mine) -- alas, where I live they reject all appeals, almost always, and with no explanation beyond "The assessed value is determined to be correct."
Title: Re: Property Taxes - to appeal or not?
Post by: Workinghard on September 05, 2014, 12:48:23 PM
So how do you appeal property taxes? I'm willing to give it a go!
Title: Re: Property Taxes - to appeal or not?
Post by: EliStache on September 05, 2014, 05:08:07 PM
Thanks, everyone!  I appreciate the advice and I think I will pursue it.  I don't expect to get very far but I think it's worth a shot and it's good to know that I can appeal it to the state too.

The assessed value is less than what I paid for the house, which is typical for this market/neighborhood.  So I realize there's not a strong case there.  The year after I bought the house, the assessment increased approx. 50% from what it had been before.  Part of the basis for the increase was the sales price (no great argument there -- the previous owners had owned the house for 20 years so there was never a big jump in the assessed value) and part was that the assessor increased the "condition" grade of the house to the best possible condition, "very good," from "average."  That's my biggest gripe because there are lots of repairs needed and the "very good" assessment was based solely on the listing photos -- which, obviously, only show the good parts! 

There's no cap on how much they can increase the assessment each year.

Workinghard, to appeal property taxes, look at the website for your local Tax Assessor or Board of Equalization and it should explain the process. In Seattle, you have to file an appeal within 60 days of when you receive the notice of the assessed value (which is mailed annually). 


Title: Re: Property Taxes - to appeal or not?
Post by: Workinghard on September 05, 2014, 06:09:21 PM
Thanks, EliStache. I'll have to check it out.
Title: Re: Property Taxes - to appeal or not?
Post by: Spork on September 05, 2014, 07:28:59 PM
If you do appeal...  make sure you talk to the right person.  We appealed several years in a row (to try to get an Ag exemption) and got turned down.

One day, my wife went in to address her mom's property.  (It went up an order of magnitude in value in one year and ... well, there were lots of really stinky things going on with the county...)  She happened to arrive when the head dude in charge was manning the desk and he had a fit...  He started slashing the value for this reason and that and another... and pretty soon, it was back to market value.

While she was there she asked about our property... and he went into detail about why someone would mistakenly not grant an Ag exemption ... but that it clearly qualified... etc.

TL;DR:  If you fail, try again until you find the right person.