Property Tax: Appealing Your Assessed Tax Value

If you are a homeowner, you are likely familiar with property tax.  Property tax is a tax assessed on the value of a piece of real estate on an annual basis.  For most people, the only piece of real estate they own is their home.  But if you own other pieces of real estate—such as investment property, a commercial building, an apartment complex, a vacation home, or even vacant land—then property tax will likewise be charged on that property as well.

The value of a piece of property is generally calculated based on both the value of the land itself and the value of any improvements on the land, such as a home, swimming pool, barn, or other buildings.  But in some jurisdictions the property value can include the value of personal property as well.  The total value is multiplied by the tax rate for the location where the property is located to determine the property tax owed.  The tax rate will vary from one location to another and may be composed of various components as determine by the local government jurisdiction.  These components can include line items for a school district, county, city, college, or other amounts.

Property tax is used to fund local services and infrastructure, such as emergency services like police, fire, ambulance, and 911; libraries; schools; maintenance of streets and other local infrastructure; and the administration needed to run the local government jurisdiction.

Your local appraisal district should assess property tax values based on current market conditions, meaning what your property would sell for.  The sales value is based on actual sales amounts for similar nearby property.  Property value may also be based on what it would cost to replace the property or what income could be generated by the property if it were rented.

However, sometimes the local appraisal district that determines property values does not get your property tax value correct.  The local appraisal district may not have accurate information as to the size or features of your home or even what type of property your real estate is.  If that is the case, the appraisal district may compare your real estate to the wrong types of similar properties, resulting in the value of your home being too high.  Or the tax rate used to calculate the property tax owed may be too high, as for example commercial property may be charged a higher property tax rate than is residential property.

Each year when you receive your property tax assessment, you have the right to appeal or dispute the taxes.  To appeal your property taxes mean that you can attempt to have the appraisal district reduce the assessed value of your property and thereby reduce the property tax you are charged.  But the process to appeal your property tax assessment may not be easy.  The steps necessary to file a property tax appeal vary by jurisdiction, but they may require that you appear in person at the local appraisal district office within a certain time frame after the assessed property value has been established.  Otherwise, you may lose your right to dispute the assessed tax value.  And you will need to provide evidence as to why you believe your property tax value is not accurate, which might include data on the sale of comparable homes.

If you have received your property tax bill and believe that your taxes are being charged based on an amount that is more than what it should be or at a tax rate that is higher than should be charged, you can contact a tax attorney to help appeal or dispute the property tax.  Tax attorneys can perform the necessary research to determine if you have a legitimate case to dispute your property tax value and they can perform the legwork necessary to file the dispute and appeal the result if it is not favorable to the taxpayer.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.