Property tax bills come due and often pose an enormous burden, and I understand the problem because I’ve been there. In fact, I nearly lost my home because of back-tax arrears. Cities raise most of their operating budgets from property taxes, and different jurisdictions could take any of several legal collection actions to get their money. These proceedings include selling tax liens to speculators, initiating foreclosure actions or attacking bank accounts or wages.
The housing market may have collapsed, but cities number among the last places to lower assessments. City assessors often evaluate properties for more than their true value. I recommend that you collect data on similar properties to prove your case and file the necessary forms for reassessment. Consider the following five steps to adjust or prepare for property taxes to avoid embarrassing legal collection proceedings:
Try to get your assessment changed.
The market collapsed dramatically, and I was able to prove that homes in my neighborhood no longer commanded premium prices from buyers. In fact, I discovered that homes with more amenities were selling for $50,000 less than my assessed home value.
- Local assessors make mistakes. Officials might assume your home has a finished basement or more bedrooms than it actually does.
- Collect data on similar home market values like I did. Clear evidence proved that similar properties had lower assessments, so city tax assessors changed my bill.
- Appeal negative rulings by getting evidence that your condo or home has failed to appreciate in value in tune with the local market.
Most jurisdictions offer property tax freezes for disabled people or senior citizens.
Check into the regulations for freezing your property taxes if you live in your home and don’t use the property to produce income. If required, you might need to meet maximum income targets to qualify, but if you fall within the limit, you could freeze your property taxes indefinitely.
Stay on top of your tax assessment.
After getting caught up with back taxes, I vowed never to let myself get blindsided again. Find out what your tax will be before you get billed. You can Google your tax office and email the officials until someone responds. Knowing what your tax bill will be gives you time to put aside the money or prepare an appeal.
Keep good records to realize tax savings.
Keeping accurate records of all expenses, repairs, independent assessments and sales prices of neighborhood properties could help you to win a favorable ruling, lower your federal income taxes or qualify for tax incentives. If you own investment property, many kinds of expenses could offset rental income to reduce your tax burden.
If seeking reassessment, you must stay on top of the issue because busy tax assessors might move along without responding unless you keep applying pressure. The sticky wheel gets greased, and tax assessors often change their tune when evidence justifies the action. Of course, strapped cities could raise property taxes for all property owners to meet budget shortfalls, but your attention and effort could easily provide a tax windfall.
Prepare for taxes by saving in advance or getting a property tax loan.
Putting aside a weekly, biweekly or monthly amount will help reduce the impact of large property tax bills. If caught unprepared, consider applying for a tax loan. Tax arrears can affect your credit, generate interest and penalties and put your home at risk, so a tax loan would make a good investment to avoid unpleasant collection actions.
Drops in credit scores could affect your ability to land a job, qualify for loans, get low-interest loans, and the lower scores could raise your insurance rates. I heartily recommend preparing for annual or semiannual tax assessments by planning carefully, keeping good records and staying aware of what’s going on in your neighborhood housing market.
About the Author: Propel Tax is a property tax loan company in Harris County, TX offering residents financial relief from property taxes for their residential or commercial properties.