Property Taxes - Get Them Reduced!

A few years back, I bought a rental and decided that my property taxes were too high. I paid $16,000 for the place (remember those prices?), but the county assessor had the property pegged at a market value of $18,400. Each spring the county had a day when one could appeal the assessment in person, so I made my case to one of the designated "judges."

I brought the closing statement showing what I paid for the property and mentioned that I wasn't related to the seller, and that he had been trying to sell the property for six months. The $16,000 I paid was clearly a fair market price. They immediately lowered the assessment and subsequent taxes, and the whole process took only a few minutes of my time. Occasionally it can be that easy.

It was a different story when my wife and I bought a house in Montana. We purchased it in 2002 from a bank for $17,500 (I have a history of buying cheap real estate), after it had been on the market a few months. According to the assessment it was worth $35,000 - exactly double what we paid for the home, and we were taxed accordingly - over $800 per year.

I gathered data on other sales in the neighborhood, showing that the value was not that high (the town was economically depressed). I sent this information with a copy of our closing statement and the opinion of our real estate agent to the appropriate agency of state government that handles appeals, also noting that we did not know the seller (nor even use their bank). But they wouldn't budge on the assessment.

Apparently when figuring property taxes in Montana, they don't consider value to be what people will actually pay for a home. Perhaps what they want to collect in taxes is the basis of the assessed value. Even after we fixed up the home and sold it for $28,000 I don't think they lowered the assessment for the next owner. Unfortunately, there isn't much you can do with this kind of dishonesty in government. Fortunately, they are more honest in most places, and if you have evidence that your property is assessed too high, you can get your property taxes lowered. A few tips follow.

Reducing Your Property Taxes

If you think you are paying too much in property taxes, go to the assessors office, and look at your "property card" or whatever they call the record that shows what is used to assess your home or other real estate. Make sure the information there is correct. Perhaps too many square feet of floor space are listed, or a garage that no longer exists is used in figuring the value. Make a note of any discrepancies that are causing a higher assessment. Measure the house, for example, or take photos to show mistakes on the form.

Also look at the assessed values of the properties around yours (this is public information in most states). If they are lower, see if you can determine why, or if yours is just too high - and take notes. Every state has their own way of recording this information, so you may need to ask for help deciphering the figures.

Get information about recent sales in your neighborhood to demonstrate the current value of your home. Do this with the help of a real estate agent, or at the county office where they keep property rolls (this might not be the assessor's office). A real estate agent can tell you how to do a simple market analysis based on "comparable sales" to determine your property value.

In some states, the property tax appeals process allows for an appraisal. Since it will likely cost you $400 or more, be sure it will be accepted as part of the appeal's process. You should also consider how much you will save in taxes before paying for an appraisal on your house or other real estate. Bring everything you can to the appeals board or whoever handles the appeal, and be polite but determined.

One more way to reduce your property taxes: You may want to consider moving to an area where they are lower. In Canon City, Colorado, for example, we pay just $300 per year on our home, which is valued at about $67,000. That's a tenth of the rate we paid in Montana (or a fifth of the "official rate" in any case).