Property taxes are rising fast, but homeowners have more tools than ever to appeal their assessment
Don’t believe what they say. You can fight city hall – and it could pay off nicely.
At a time when property-tax bills are rising fast, appealing an assessment may save homeowners hundreds of dollars and sometimes even more, according to new research.
Nationwide, four in 10 residential properties could noticeably reduce their tax burden by challenging the assessed value with local tax authorities, according to a new analysis from Realtor.com. Homeowners willing to question the assessor’s valuation could reduce their tax bill by a median of $539, researchers determined.
The Realtor.com research pegged last year’s median property-tax bill at $3,500 nationally, a 2.8% increase from 2023. The findings align with other data showing that while property taxes are a local matter, the rising bills are becoming a national issue.
Though homeowners are also getting squeezed by higher insurance, maintenance and utility costs, many aren’t contesting their tax bill. “It’s not as many as you would think or would hope,” said Joel Berner, senior economist at Realtor.com.
Realtor.com recently launched a tool that it says will let users see if their home is potentially overassessed and whether it would be worth it to appeal their tax bill.
Approximately eight in 10 people have never appealed their property-tax bill, according to a survey from Ownwell, a platform homeowners can use to do just that.
Colton Pace, the site’s CEO and founder, sees signs that people are catching on. More homeowners in Texas have been contesting their bills in recent years, according to Ownwell, which added more than 100,000 new customers in the first few months of the year. Ownwell works with experts who file customers’ property-tax appeals. It charges a fee only if a homeowner’s appeal is successful.
Property taxes are a key way that counties and towns fund schools, police and fire departments, parks and infrastructure. Too little property-tax revenue may hamper a local government’s capacity to deliver these services. So local governments have to find a balance between collecting enough money to fund these services and making sure the tax burden is fair for homeowners.
People have long had the power to contest the estimated value of their home for tax purposes. The recent “property-tax revolt,” as one expert described the growing concerns about rising property taxes, is putting the remedy front and center.
But Pace said there’s still a major awareness gap for homeowners – and possibly some discomfort in challenging a tax bill. Many people aren’t used to haggling with the authorities, he said.
Typically, people who get a bill from the government aren’t likely to say, “No, you’re wrong,” Pace said. “That’s kind of what you have to do here.”
If you’re considering contesting your tax bill, here are some tips on how to do it effectively.
Make sure the information about your home is accurate
Local assessments estimating a home’s value are part of the homeowner’s tax-bill equation, which also includes the local tax rate, sometimes called the mill rate.
For starters, homeowners should check the assessor’s accuracy, because it’s not a guarantee that everything is correct. “The easiest case to win is that they just have the wrong information,” said Pace.
Make sure the assessment reflects the correct lot size and the home’s square footage and the year it was built, he said. Also check to make sure the assessment hasn’t factored in a pool or patio that doesn’t exist, Pace added. Sometimes, satellite-view maps may mistake sheds, pergolas or other structures for pools, which can add taxable value to a home.
There’s another basic fact to confirm at the start, said Gary H. Smith, a principal at law firm Kovitz Shifrin Nesbit: Is the assessment presenting the highest taxable value? That’s the case in most places, he said, but it’s still worth double-checking. If the number in dispute is lower than it could be, Smith said, it’s possible an appeal could backfire and increase the taxable value rather than lower it.
Once you’re sure the proverbial ceiling is set on the assessed value, “all you can do is a nothing or a benefit to yourself” with an appeal, he said.
Tell the story of your house and its value
A person’s house is often their largest investment, and one that is close to their heart. Homeowners should use that intimate knowledge to their advantage in a tax-bill appeal, said Smith.
As Smith fights tax bills in Cook County, Ill., he always asks clients to tell him about the property’s characteristics. Does it need serious repairs? Is it near a fire station that has sirens wailing at all hours, a highway with noise pollution, a swamp that restricts development or some other characteristic that could lower its taxable value?
“The first thing I say is, they know the home better than anybody,” he said. “If there are particular circumstances, the property owner, the taxpayer knows them. The county may not.”
He’ll sometimes find homeowners who are concerned that roof repairs and other costly upkeep might count against them in their fight to lower the bill. But that’s not the case, he said: Valuations assume a home is in good condition, and something like a roof repair simply maintains that good condition.
Make sure there’s a fair comparison to your neighbors’ homes
Challenging an assessment is about highlighting a home’s distinctions – but it’s also about ensuring that a property is valued like similar nearby homes. This concept is known as uniformity, Smith said, and it functions as “sort of equal protection for properties.”
The rules in some states may let a homeowner put a lot of weight on a neighbor’s assessed value to justify a lower assessment of their own property, Ownwell’s Pace said, while the rules in other states may not.
Though it’s important to know the local rules for how taxable value is determined, market data is an key part of the equation. If a home’s assessed value is well above its sale price, that’s a clue the assessment is ripe for an appeal because it’s not reflecting market conditions, Pace said.
One tell is the gap between a home’s assessed value and how it compares with similar, recently sold homes, he explained. “There’s no specific dollar threshold at which the flag automatically pops up – it’s more about the percentage difference between assessed value and actual market sales,” he said.
This will vary by state, and in some states, the assessed value is automatically lower than the market value, he said. “Generally, a 3% to 5% or more gap between assessed value and market value changes warrants an appeal.”
The Realtor.com tool, which is free to use, estimates whether a property’s assessed value is close to the market value or potentially too high. The tool reviews recent comparable sales and assessed values of other homes, said Dave Masters, senior director of product at the company.
Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.
Decide whether to hire a property-tax pro
Homeowners can appeal their assessment themselves or they can enlist the help of a professional. Personally pressing the case has some challenges, starting with the learning curve when it comes to local rules and timelines, said Smith.
It’s common for deadlines to be tight and ironclad, said Smith. In Cook County, “if you miss it by a minute, you miss it by a year,” he said. That’s likely the case in many jurisdictions, he noted. Specialists in property-tax appeals will know those deadlines.
Hiring a professional doesn’t necessarily mean hiring a lawyer. For example, a real-estate broker can wage an appeal in Florida, and in Texas, it can be a licensed property-tax consultant, Pace said.
The industry standard is to charge a contingency fee that is a percentage of the amount saved on the tax bill, Smith noted. Though some professionals handling an appeal may ask for a fee up front, he said, that’s not necessary, and homeowners should look for people working on contingency. At Ownwell, Pace said, there’s no fee to use the service, but the company charges users between 25% to 35% of the tax savings.
Professionals know the deadlines and cut to the chase with key data points and arguments that assessors’ offices want to hear, Smith said.
“One of the problems is taxpayers get so emotionally involved, they want to tell so much of the story that the story gets lost,” he said. “A four- to five-page brief of what their concerns are could really be summed up in three, four lines.”
Know when an appeal is worth it
It’s always possible that an appeal successfully lowers the home’s assessed value but yields only modest bottom-line tax savings – a humbling way to conclude an appeals process that can go on for months.
Ownwell’s users have had an 80% success rate at shaving money off their bill, Pace said. Success is defined as a reduction by at least some amount, which can sometimes be hefty, he said.
Pace has found that assessors’ offices will refuse to lower valuations if they would subtract $5,000 at most from the home’s taxable value. That amount seems to represent a sort of margin of error, he said, and generally speaking, local officials “are less inclined to make a small change like that.”
Smith doesn’t have a hard-and-fast rule for when the potential savings may not be worth the effort. His clients usually need about four or five hours to compile their documents and do their preparation before he takes over.
Even if savings are modest, there can be longer-term benefits to a successful property-tax appeal, because it keeps the home’s taxable value tethered to market conditions as the housing market develops. “You really do want to maintain your level throughout the years,” he said.
