OPTIONS TO PREVENT UNFAIR PROPERTY TAXES

INTRODUCTION

Owning real estate means you are ready to pay taxes on such property. There is no way to legally avoid this. The revenue generated from property and other taxes is used by your government to improve the living conditions by providing critical infrastructure like roads, water supply, and electricity and so on. As a citizen, it is a moral obligation to pay your tax so that your government can meet the challenge of making your country a better place to live for you and generations to come. However, you should take care to pay taxes only according to what the law in your state or area stipulates. Not doing so can have financial implications for you. A good number of people are suffering this consequence. You could be one of those, as most people are not aware that they are paying more than they should on property tax. It is the aim of this article to discuss some measures you can take to ensure that you are not been taxed unfairly. Before we look at these measures, it is vital to first define property tax just to keep things straight.

WHAT IS A PROPERTY TAX?

It is tax on real estate such as houses and land that is calculated based on the market value of the property at any given time. This tax varies by states even within the same country. Normally a government appointed assessor will visit the property, determine its present market value and multiply it by the tax rate as pre-ordained by that jurisdiction. And that is the amount payable to the government by the owner of the property.

WHAT TO KNOW BEFORE OWNING A PROPERTY

Before you own a property, you will have to buy, inherit, or be given it for free. If you are buying it, then you should take care that there is no claim on that property by any third party. For example, accumulated tax, bills or loans that have not been paid. If you discover any claims on the property, it should feature in your negotiation. Having determined the condition of that property, the next step is to study the tax laws of that area. Rates, assessment and taxable properties vary by jurisdiction. Do not assume it to be uniform all over. Only when you have confirmed the status of that property, and are familiar with the tax laws should you begin negotiating a deal.

WHAT TO DO IF YOU OWN PROPERTY LIABLE TO TAX

So now you own taxable property. It is time to make sure that you are not over-taxed. In some countries like the US, a study revealed that 60% of homes are being over-valued for property tax – and only 2% of the property owners are doing something about it. The remaining 98% just keep paying. Probably because they do not know what to do, or haven’t the guts to file an appeal, or are even unaware. And this is not happening only in the US. It’s everywhere. For this reason, we have outlined some steps you can take to investigate the tax you are paying and make sure there are no errors costing extra money.

CHECK YOUR PROPERTY CARD FOR ASSESSMENT ERROR

The major reason for higher property taxes is over-valuing of the property by assessors. Some assessors do not go through the property during assessment. They estimate the value by just examining a portion of the property. This often happens in the absence of the owner. The likelihood of wrong assessment or mistakes increases. That is why you need to be around during assessments. While you cannot alter the tax rate as this is predetermined by your local jurisdiction, you have a say in the assessment. You can explain to them why a little decoration or construction shouldn’t feature in the assessment. In most cases they can be persuaded – particularly if you have a good relationship with your assessor. Note that there is no universal formula for assessing property. That is why the government let you have a say in the assessment process. Also crutinize your property card. There might be a mistake with the number of rooms or outbuildings, or the property is being taxed based on a previous market value way higher than the current market value.

GET EDUCATED ON TAX LAWS FOR YOUR NEIGHBORHOOD AND BE CURRENT.

Check the website of your Assessor’s office. They are the people deciding how much you pay based on their assessment. Any mistake or deliberate act on their part will hit you financially. You have to know as much as you can, what is going on in their operations. And one of the first places to do that is their website. You will likely find some very important information on how they determine property value, and this information will help you detect mistakes and provide you with a good excuse to face them for correction. They also provide information on when the next assessment will take place. This is particularly important as it will give you time to prepare and wait for the assessors. Any assessment done in your absence could lead to higher taxes for you. In the same way, you should check any real estate website for recent sales of property in your neighborhood. This is because some assessments are based on home sales or the cost of replacing your home in a particular neighborhood. If this is the case with your neighborhood and you are able to find a recent sale, it will be a good idea to take a look at the property and compare it to your own. You may discover it is worth much more than yours, but been valued at the same level. Meaning your property is being over-valued. You can then go to your assessor’s office and get the differences settled, provided assessments are based on market value.

CHECK THE PROPERTY CARD OF YOUR NEIGHBOR

Sometimes your neighbor’s home is worth more than yours, or should have the same value as your own. And because your neighbor took the necessary steps to prevent over-valuing of their property, they are paying less instead of the same as you. The card normally contains information like number of bedrooms, outbuildings, and when each assessment was made. You can request to see their card when you visit your assessor’s office. They will let you see it. In fact many people visit their assessor’s office only to check property cards of their neighbors.

BEWARE OF EXTRA CONSTRUCTIONS AND DECORATIONS

A gallant decoration to your property may exaggerate its real value to assessors. They are humans too. And as humans we are prone to assume that any spectacular sight that stands out among others must be worth much more than the rest. But in reality this is not always the case. Assessors often compare your home to surrounding houses and will tax you accordingly. It does not mean that you should not maintain your home. The point is not to overly decorate it. Similarly, extra constructions in the home might be considered by assessors and increase your tax. You may want to build an art studio for your hobby, or a shed for your lawnmower, or perhaps construct a water-slide from the master bath to a big indoor pool. These are all good to have, but they will not help with reducing your property tax. Add these constructions only if you really need them, and be around to explain them away when it’s time for assessment.

CONCLUSION

If you discover any errors with your property tax, simply head over to your assessor’s office and have it rectified. In most cases discussing the issue with them will lead to a solution satisfactory to both of you. In the event that the issue is not solved you can file an appeal. Be cautious about this though, as your assessor wouldn’t be happy with you. They may look at it as a bad mark on their competence should you win the appeal. Some assessors will even dig up some offences you have made that they have been overlooking so far. Things like you having issues with zoning compliance and the like. So take not of any defaults before proceeding with an appeal.